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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 11-K
[X] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
For the fiscal year ended December 31, 1993.
Commission file number 1-8765
CARTER HAWLEY HALE SAVINGS AND INVESTMENT PLAN
(Full title of the Plan)
BROADWAY STORES, INC.
(Exact name of issuer of securities held)
3880 North Mission Road
Los Angeles, California 90031
(Address of issuer of securities held pursuant to the plan)
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1
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CARTER HAWLEY HALE SAVINGS AND INVESTMENT PLAN
INDEX
PAGE
----
Report of Independent Accountants 3
Financial Statements:
Statement of Net Assets Available for Benefits 4
Statement of Changes in Net Assets Available for Benefits 5
Notes to Financial Statements 6
Supplementary Financial Schedules:
Schedule I - Schedule of Assets Held for Investment at
December 31, 1993 9
Schedule V - Schedule of Reportable Transactions for the Year
Ended December 31, 1993 10
Signature 11
Index to Exhibits 12
2
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REPORT OF INDEPENDENT ACCOUNTANTS
---------------------------------
To the Participants of the Carter Hawley Hale
Savings and Investment Plan and the Employee
Benefits Administrative Committee
of Broadway Stores, Inc.
In our opinion, the accompanying Statement of Net Assets Available for Benefits
and the related Statement of Changes in Net Assets Available for Benefits
present fairly, in all material respects, the net assets available for benefits
of the Carter Hawley Hale Savings and Investment Plan at December 31, 1993 and
the changes in its net assets available for benefits for the year ended December
31, 1993, in conformity with generally accepted accounting principles. These
financial statements are the responsibility of the plan's management; our
responsibility is to express an opinion on these financial statements based on
our audit. We conducted our audit of these statements in accordance with
generally accepted auditing standards which require that we plan and perform the
audit to obtain reasonable assurance about whether the financial statements are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements,
assessing the accounting principles used and significant estimates made by
management, and evaluating the overall financial statement presentation. We
believe that our audit provides a reasonable basis for the opinion expressed
above.
Our audit was made for the purpose of forming an opinion on the basic financial
statements taken as a whole. The additional information included in schedules I
and V is presented for purposes of additional analysis and is not a required
part of the basic financial statements but is additional information required by
the Employee Retirement Income Security Act of 1974 as amended. Such
information has been subjected to the auditing procedures applied in the audit
of the basic financial statements and, in our opinion, is fairly stated in all
material respects in relation to the basic financial statements taken as a
whole.
We have previously audited, in accordance with generally accepted auditing
standards, the statement of net assets available for benefits as of December 31,
1992 and the related statement of changes in net assets available for benefits
for the year then ended (not presented herein) and in our report dated June 23,
1993 we expressed an unqualified opinion on those financial statements. In our
opinion, the information set forth in the accompanying statement of net assets
available for benefits as of December 31, 1992, when read in conjunction with
the financial statements from which it has been derived, is fairly stated in all
material respects in relation thereto.
PRICE WATERHOUSE
Los Angeles, California
June 27, 1994
3
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<TABLE>
<CAPTION>
CARTER HAWLEY HALE SAVINGS AND INVESTMENT PLAN
STATEMENT OF NET ASSETS AVAILABLE FOR BENEFITS
DECEMBER 31, 1993 DECEMBER 31,
------------------------------------------------------------------------------------ 1992
MONEY BROADWAY BROADWAY NMG -------------
MARKET BOND EQUITY COMMON PREFERRED COMMON
ASSETS FUND FUND FUND STOCK STOCK STOCK TOTAL TOTAL
------ ----------- ---------- ---------- ---------- ---------- ---------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Cash and cash equivalents $ $ $ $ 2,704 $ 885 $ 80 $ 3,669 $
Investments, at market
value 24,983,655 2,487,530 3,762,892 5,615,194 2,251,828 8,538,956 47,640,055 50,822,368
Company contribution
receivable 412,248 412,248 949,855
Participant contributions
and other miscellaneous
receivables 44,670
----------- ----------- ----------- ----------- ----------- ----------- ------------ -----------
Total assets 24,983,655 2,487,530 3,762,892 6,030,146 2,252,713 8,539,036 48,055,972 51,816,893
LIABILITIES AND PLAN EQUITY
---------------------------
Trustee and management fees
payable (19,777)
----------- ----------- ----------- ----------- ----------- ----------- ------------ -----------
Net assets available for
benefits for approximately
7,600 and 8,500 participants,
respectively $24,983,655 $2,487,530 $3,762,892 $6,030,146 $2,252,713 $8,539,036 $48,055,972 $51,797,116
----------- ----------- ----------- ----------- ----------- ----------- ------------ -----------
----------- ----------- ----------- ----------- ----------- ----------- ------------ -----------
</TABLE>
See Accompanying Notes to Financial Statements.
4
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<TABLE>
<CAPTION>
CARTER HAWLEY HALE SAVINGS AND INVESTMENT PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
YEAR ENDED DECEMBER 31, 1993
------------------------------------------------------------------------------------------------------
MONEY BROADWAY BROADWAY NMG
MARKET BOND EQUITY COMMON PREFERRED COMMON
FUND FUND FUND STOCK STOCK STOCK TOTAL
--------------- -------------- ------------- -------------- ------------- ------------- --------------
<S> <C> <C> <C> <C> <C> <C> <C>
Investment income
Net appreciation
(depreciation) in value $ 1,127,602 $ 94,063 $ 183,456 $ 761,220 $ 670,421 $ (195,818) $ 2,640,944
Dividends and interest 109,202 109,202
--------------- -------------- ------------- -------------- ------------- ------------- --------------
1,127,602 94,063 183,456 761,220 670,421 (86,616) 2,750,146
--------------- -------------- ------------- -------------- ------------- ------------- --------------
Contributions
Participants 1,536,936 514,641 984,503 132,326 3,168,406
Broadway Stores, Inc. 412,248 412,248
--------------- -------------- ------------- -------------- ------------- ------------- --------------
1,536,936 514,641 984,503 544,574 3,580,654
--------------- -------------- ------------- -------------- ------------- ------------- --------------
2,664,538 608,704 1,167,959 1,305,794 670,421 (86,616) 6,330,800
--------------- -------------- ------------- -------------- ------------- ------------- --------------
Distributions (6,329,067) (105,446) (136,399) (1,379,535) (444,264) (1,677,233) (10,071,944)
Transfers between funds (4,050,618) 1,984,272 2,731,332 2,866 (113,830) (554,022)
--------------- -------------- ------------- -------------- ------------- ------------- --------------
(10,379,685) 1,878,826 2,594,933 (1,376,669) (558,094) (2,231,255) (10,071,944)
--------------- -------------- ------------- -------------- ------------- ------------- --------------
Increase (decrease)
in net assets available
for benefits (7,715,147) 2,487,530 3,762,892 (70,875) 112,327 (2,317,871) (3,741,144)
Net assets available for
benefits at beginning
of year 32,698,802 6,101,021 2,140,386 10,856,907 51,797,116
--------------- -------------- ------------- -------------- ------------- ------------- --------------
Net assets available for
benefits at end of year $ 24,983,655 $ 2,487,530 $ 3,762,892 $ 6,030,146 $ 2,252,713 $ 8,539,036 $ 48,055,972
--------------- -------------- ------------- -------------- ------------- ------------- --------------
--------------- -------------- ------------- -------------- ------------- ------------- --------------
</TABLE>
See Accompanying Notes to Financial Statements.
5
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CARTER HAWLEY HALE SAVINGS AND INVESTMENT PLAN
NOTES TO FINANCIAL STATEMENTS
DESCRIPTION OF THE PLAN
The following description of the Carter Hawley Hale Savings and Investment Plan
(the "Plan") is provided for general information purposes only. Participants
should refer to the Plan agreement (the "Agreement") for more complete
information.
GENERAL
The Plan is a defined contribution plan administered by the Employee Benefits
Administrative Committee (the "Committee") of Broadway Stores, Inc. (the
"Company"), formerly known as Carter Hawley Hale Stores, Inc. On February 9,
1993, the Board of Directors of the Company adopted the Plan, as amended and
restated. The Plan, as amended and restated, reestablished Company matching
contributions, created additional investment options, and enabled participants
to direct their own investment allocations and monitor their accounts by using a
telephone information and transaction system. Prior to the restatement, the
Plan was known as the "Carter Hawley Hale 401(k) Investment Plan".
TRUSTEE FOR PLAN ASSETS
In March 1993, the Plan appointed Bankers Trust Company as the trustee for plan
assets. During 1993 all assets were transferred to Bankers Trust Company from
the former trustee, Bank of America N.T. and S.A.
PLAN INVESTMENTS
Prior to March 1993, employee contributions were being invested entirely in a
limited risk investment fund. Plan investments also included shares of Company
common stock as a result of Company and participant investments made prior to
February 1991, shares of Company preferred stock issued in connection with the
Company's emergence from bankruptcy in October 1992 and shares of common stock
of The Neiman Marcus Group as a result of a distribution received in connection
with the Company's restructuring which was completed in 1987.
Commencing March 1993, investment choices became participant directed and were
broadened to include money market, bond, and equity funds together with an
option to invest in shares of Company common stock. No recommendation is made
by the Company, the Committee, or the Trustee as to whether employees should
make contributions under the Plan or invest contributions in any of the
investment choices provided. No additional investments may be made in shares of
the Company preferred stock or Neiman Marcus common stock.
The money market fund invests in highly liquid, short maturity, and high credit
quality securities. The bond fund invests principally in fixed income
securities included in the Lehman Brothers Aggregate Bond Index. The equity
fund invests principally in common stocks of those companies included in the
Standard & Poor's 500 Stock Price Index.
COMPANY CONTRIBUTIONS
Subsequent to filing for bankruptcy in February of 1991, the Company matching
contributions had been suspended. The Company emerged from bankruptcy in
October 1992 and, effective April 1, 1993, Company matching contributions
resumed at a rate of 25% of the participant's pretax contributions up to 6% of
compensation earned on or after April 1, 1993 (subject to limitations for
certain highly compensated employees). Matching contributions will only be made
if the participant is employed by the Company and eligible to participate in the
Plan on December 31 of the applicable year.
6
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ELIGIBILITY REQUIREMENTS
Employees are eligible to participate in the Plan if they have 1,000 hours or
more of service with the Company either during their first 12 months of
employment or during any Plan year commencing after their initial date of
employment with the Company.
EMPLOYEE CONTRIBUTIONS
Within limits set out in Section 401(k) of the Internal Revenue Code (the
"Code"), as amended in 1986, participants may elect to contribute between two
and twelve percent of their pre-tax compensation; provided, however, that if the
employee is a highly compensated employee for purposes of Section 414(q) of the
Code, contribution rates are limited to between two and six percent of pre-tax
compensation. The Plan provides for participants to change the rate of
contribution, suspend contributions or resume contributions effective as of the
first paydate in the month following the election. Participants' contributions
and earnings thereon are fully vested at all times; however, certain withdrawal
restrictions apply under the Code to contributions of participants continuing in
the service of the Company.
EXPENSES OF THE PLAN
Each month, the Plan is charged a portion of the direct expenses relating to
investment management, trustee, and administrative costs. The money market,
bond and equity funds are directly charged for expenses at fixed monthly rates
of .0375%, .0350% and .0417%, respectively, based on the fund's month end
balance. In 1993, plan earnings were reduced by $120,771 for these expenses.
Costs in excess of these charges are borne by the Company.
PLAN TERMINATION
The Company has not expressed an intent to terminate the Plan as it may subject
to Plan provisions. No amendment or termination of the Plan, however, shall
allow any part of the funds held by the trustee to return to the Company or to
be used for any purpose other than for exclusive benefit of the participants.
BASIS OF FINANCIAL STATEMENT PREPARATION
The accompanying financial statements are prepared on the accrual basis of
accounting. The money market, bond, and equity funds are valued at fair market
value at the end of each business day by the investment manager. The investment
in shares of common stock of the Company and in shares of The Neiman Marcus
Group are valued at market based upon the closing New York Stock Exchange
composite price at the Plan year end. The investment in Company preferred stock
is convertible into warrants to purchase Company common stock and is valued at
market based upon the price of the warrants at Plan year end. The change in the
difference between beginning and end of period cost and market value of Plan
investments is presented in the Statement of Changes in Net Assets Available for
Benefits as net appreciation (depreciation) in value.
OBLIGATIONS TO WITHDRAWING PARTICIPANTS
Net assets available for benefits include $1,589,961 and $244,071 for amounts
owing to withdrawing participants as of December 31, 1993 and 1992,
respectively. These amounts are reflected as liabilities on the Plan's Form
5500.
COMPANY CONTRIBUTION RECEIVABLE
The 1993 Company matching contribution of 44,298 shares of newly issued shares
of Company common stock was reflected as a Company contribution for the year
ended December 31, 1993
7
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and was included as a Company contribution receivable of $412,248 at December
31, 1993. The $949,855 prior year Company contribution receivable was
contributed to the money market fund during 1993.
ASSETS HELD FOR INVESTMENT
Assets held for investment are shown at current value on the Statement of Net
Assets Available for Benefits. The cost basis of the investments are as
follows:
<TABLE>
<CAPTION>
Cost Basis At
---------------------------
December 31, December 31,
1993 1992
--------- ----------
<S> <C> <C>
Money market fund $24,983,655 $31,724,054
Bond fund 2,392,200 --
Equity fund 3,573,857 --
Company common stock 41,247,743 49,257,572
Company preferred stock 3,979,181 4,853,818
Neiman Marcus common stock 5,910,963 7,698,880
</TABLE>
TAX STATUS OF THE PLAN
The Internal Revenue Service has determined and informed the Company by a
letter, including amendments effective July 1, 1987, that the Plan and related
trust are designed in accordance with applicable sections of the Code. The plan
has been amended since receiving the determination letter. However, the plan
administrator and the plan's tax counsel believe that the plan is designed and
is currently being operated in compliance with the applicable requirements of
the Code. Therefore, no provision for income taxes has been included in the
plan's financial statements.
CHANGE IN MARKET VALUE OF PLAN INVESTMENT IN COMPANY AND NEIMAN MARCUS GROUP
SHARES
The net market value of the December 31, 1993 Plan investment in Company and
Neiman Marcus Group shares of common and Company preferred stock changed during
the period January 1, 1994 to June 27, 1994 as follows:
<TABLE>
<CAPTION>
Market Value At
--------------------------
Number of December 31, June 27,
Shares 1993 1994 Change
-------- ------------ -------------- --------------
<S> <C> <C> <C> <C>
Company Common Stock 591,073 $ 5,615,194 $ 5,024,121 $ (591,073)
Company Preferred Stock 581,117 2,251,828 1,089,594 (1,162,234)
Neiman Marcus Group 455,411 8,538,956 7,172,723 (1,366,233)
------------ ------------ ------------
$ 16,405,978 $ 13,286,438 $ (3,119,540)
------------ ------------ ------------
------------ ------------ ------------
</TABLE>
SUPPLEMENTARY FINANCIAL SCHEDULES
The information included in the accompanying Schedules I and V has been prepared
as of and for the year ended December 31, 1993 as required by the Employee
Retirement Income Security Act of 1974 as amended. Schedules not included in
this supplementary information have been omitted because they are not
applicable.
8
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SCHEDULE I
<TABLE>
<CAPTION>
CARTER HAWLEY HALE SAVINGS AND INVESTMENT PLAN
SCHEDULE OF ASSETS HELD FOR INVESTMENT
AT DECEMBER 31, 1993
Market
Units Shares/Description Cost Value
- - -------- ----------------------------- --------------- -------------
<C> <S> <C> <C>
Money Market Fund of Broadway
Stores, Inc. $ 24,983,655 $ 24,983,655
Bond Fund of Broadway
Stores, Inc. 2,392,200 2,487,530
Equity Fund of Broadway
Stores, Inc. 3,573,857 3,762,892
591,073 Common Stock of Broadway
Stores, Inc. 41,247,743 5,615,194
581,117 Preferred Stock of Broadway
Stores, Inc. 3,979,181 2,251,828
455,411 Common Stock of Neiman-Marcus
Group Inc. 5,910,963 8,538,956
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$ 82,087,599 $ 47,640,055
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--------------- -------------
</TABLE>
9
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SCHEDULE V
<TABLE>
<CAPTION>
CARTER HAWLEY HALE SAVINGS AND INVESTMENT PLAN
SCHEDULE OF REPORTABLE TRANSACTIONS
FOR THE YEAR ENDED DECEMBER 31, 1993
CURRENT VALUE
IDENTITY OF OF ASSET
PARTY NUMBER OF NUMBER OF COST OF ON DATE OF NET GAIN
INVOLVED DESCRIPTION OF ASSET PURCHASES SALES ASSET TRANSACTION OR (LOSS)
- - ---------------------- ----------------------------------- -------------- ----------- --------------- ---------------- -----------
<S> <C> <C> <C> <C> <C> <C>
Bank of America, Transfer of assets from Bank of
N.T. & S.A. America, N.T. & S.A. to Bankers
Trust Co, NA 11 11 $ 32,533,469 $ 32,533,469 $ 0
Bankers Trust Company Purchases of units of Bankers
of California, N.A. Trust Co., N.A. Discretionary
Cash Fund 175 $ 35,759,119 $ 35,759,119 $ 0
Bankers Trust Company Sales of units of Bankers Trust
of California, N.A. Co., N.A. Discretionary Cash Fund 164 $ 10,913,347 $ 10,913,347 $ 0
Bankers Trust Company Purchases of units of Bankers
of California, N.A. Trust Co., N.A. Equity Fund 112 $ 3,700,240 $ 3,700,240 $ 0
Bankers Trust Company Sales of units of Bankers Trust
of California, N.A. Co., N.A. Equity Fund 19 $ 126,384 $ 130,738 $4,354
Bankers Trust Company Purchases of units of Bankers
of California, N.A. Trust Co., N.A. Bond Fund 95 $ 2,508,835 $ 2,508,835 $ 0
Bankers Trust Company Sales of units of Bankers Trust
of California, N.A. Co., N.A. Bond Fund 21 $ 116,638 $
121,256 $4,618
</TABLE>
10
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Employee Benefits Administrative Committee of the registrant has duly caused
this annual report to be signed on its behalf by the undersigned hereunto duly
authorized.
CARTER HAWLEY HALE SAVINGS AND INVESTMENT PLAN
June 27, 1994 By /s/ JOHN D. DAVIES
------------------------------------------
John D. Davies
Vice President, Accounting
11
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CARTER HAWLEY HALE SAVINGS AND INVESTMENT PLAN
INDEX TO EXHIBITS
Exhibit
No. Description
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23.1* Consent of Price Waterhouse
* Exhibit filed with this Form 11-K
12
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EXHIBIT 23.1
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Registration
Statement on Form S-8 (No. 33-58478) of Broadway Stores, Inc. of our report
dated June 27, 1994 appearing on page 3 of this Form 11-K.
Price Waterhouse
Los Angeles, California
June 27, 1994
