<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-Q
QUARTERLY REPORT FILED PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended July 31, 1999 Commission file number 1-8897
CONSOLIDATED STORES CORPORATION
A Delaware Corporation
IRS No. 06-1119097
1105 North Market Street, Suite 1300
P. O. Box 8985
Wilmington, Delaware 19899
(302) 478-4896
Indicate whether the Registrant (1) has filed all reports required to be
filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months, and (2) has been subject to such filing
requirements for the past 90 days. Yes [X] No [ ]
The number of shares of Common Stock $.01 par value per share, outstanding
as of September 2, 1999, was 110,702,523 and there were no shares of
Nonvoting Common Stock, $.01 par value per share outstanding at that date.
<PAGE> 2
CONSOLIDATED STORES CORPORATION
QUARTERLY REPORT ON FORM 10-Q
INDEX
Page
----
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Consolidated Balance Sheets 3
Condensed Consolidated Statements of Income 4
Condensed Consolidated Statements of Cash Flows 5
Notes to Condensed Consolidated Financial Statements 6
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations 7
PART II - OTHER INFORMATION
Items 1 - 6 13
Signature 14
<PAGE> 3
CONSOLIDATED STORES CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT PAR VALUE)
<TABLE>
<CAPTION>
July 31, January 30,
1999 1999
- --------------------------------------------------------------------- ----------
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 83,800 $ 75,906
Inventories 1,274,334 1,096,844
Deferred income taxes 99,075 98,739
Other current assets 95,733 63,686
- --------------------------------------------------------------------- ----------
Total current assets 1,552,942 1,335,175
- --------------------------------------------------------------------- ----------
Property and equipment - net 712,879 683,437
Other assets 45,108 23,912
- --------------------------------------------------------------------- ----------
$2,310,929 $2,042,524
===================================================================== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 386,307 $ 337,368
Accrued liabilities and income taxes 80,382 122,221
Current maturities of long-term obligations 147,669 352
- --------------------------------------------------------------------- ----------
Total current liabilities 614,358 459,941
- --------------------------------------------------------------------- ----------
Long-term obligations 380,838 295,619
Deferred income taxes and other liabilities 126,472 105,062
Commitments and contingencies
STOCKHOLDERS' EQUITY:
Preferred stock - authorized 2,000 shares, $.01 par
value: none issued
Common stock - authorized 290,000 shares, $.01 par
value; issued 110,156 and 109,524 shares, respectively 1,102 1,095
Nonvoting common stock - authorized 8,000 shares, $.01
par value; none issued
Additional paid-in capital 401,101 385,612
Retained earnings 787,058 795,195
- --------------------------------------------------------------------- ----------
Total stockholders' equity 1,189,261 1,181,902
- --------------------------------------------------------------------- ----------
$2,310,929 $2,042,524
===================================================================== ==========
</TABLE>
<PAGE> 4
CONSOLIDATED STORES CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(IN THOUSANDS, EXCEPT INCOME PER COMMON SHARE DATA)
<TABLE>
<CAPTION>
Thirteen weeks ended Twenty-six weeks ended
---------------------- --------------------------
July 31, August 1, July 31, August 1,
1999 1998 1999 1998
- ---------------------------------------------------- --------- ----------- -----------
<S> <C> <C> <C> <C>
Net sales $ 929,802 $ 823,870 $ 1,853,549 $ 1,647,172
Costs and expenses:
Cost of sales 545,153 481,645 1,083,653 964,938
Selling and administrative expenses 386,308 325,881 772,875 660,476
Interest expense 5,641 5,690 10,471 9,764
- ---------------------------------------------------- --------- ----------- -----------
937,102 813,216 1,866,999 1,635,178
- ---------------------------------------------------- --------- ----------- -----------
Income (loss) before income taxes (7,300) 10,654 (13,450) 11,994
Income taxes (2,884) 4,148 (5,313) 4,671
- ---------------------------------------------------- --------- ----------- -----------
Net income (loss) $ (4,416) $ 6,506 $ (8,137) $ 7,323
- ---------------------------------------------------- --------- ----------- -----------
Income (loss) per common share $ (0.04) $ 0.06 $ (0.07) $ 0.07
Income (loss) per common share - diluted $ (0.04) $ 0.06 $ (0.07) $ 0.06
Average common shares outstanding 110,123 109,355 109,982 108,928
Dilutive effect of stock options 3,757 4,029
- ---------------------------------------------------- --------- ----------- -----------
Diluted 110,123 113,112 109,982 112,957
- ---------------------------------------------------- --------- ----------- -----------
</TABLE>
The accompanying notes are an integral part of these condensed financial
statements.
<PAGE> 5
CONSOLIDATED STORES CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
Twenty-six weeks ended
----------------------
July 31, August 1,
1999 1998
- -------------------------------------------------------------------- ---------
<S> <C> <C>
OPERATING ACTIVITIES:
Net income (loss) $ (8,137) $ 7,323
Adjustments to reconcile net income to net cash used in
operating activities:
Depreciation and amortization 45,605 45,655
Deferred income taxes 365 17,342
Other 8,588 17,484
Change in assets and liabilities (202,436) (323,494)
- -------------------------------------------------------------------- ---------
Net cash used in operating activities (156,015) (235,690)
- -------------------------------------------------------------------- ---------
INVESTMENT ACTIVITIES:
Capital expenditures (77,594) (86,562)
Other 875 27
- -------------------------------------------------------------------- ---------
Net cash used for investment activities (76,719) (86,535)
- -------------------------------------------------------------------- ---------
FINANCING ACTIVITIES:
Proceeds from credit agreements, net 232,725 298,953
Payment of other debt, net (189) (172)
Proceeds from exercise of stock options 8,092 18,617
Increase in deferred credits 2,521
- -------------------------------------------------------------------- ---------
Net cash provided by financing activities 240,628 319,919
- -------------------------------------------------------------------- ---------
Increase (decrease) in cash and cash equivalents $ 7,894 $ (2,306)
- -------------------------------------------------------------------- ---------
Supplemental Disclosure of Cash Flow Information:
Income taxes paid $ 41,652 $ 43,137
Interest paid 10,535 10,757
</TABLE>
The accompanying notes are an integral part of these condensed financial
statements.
<PAGE> 6
CONSOLIDATED STORES CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - BASIS OF PRESENTATION
- ------------------------------
The condensed consolidated balance sheet at July 31, 1999, and the condensed
consolidated statements of income and statements of cash flows for the thirteen
and twenty-six week periods ended July 31, 1999, have been prepared by the
Company without audit. In the opinion of management, all adjustments necessary
to present fairly the financial position, results of operations, and cash flows
at July 31, 1999, and for the thirteen and twenty-six week periods presented
have been made. Such adjustments consisted only of normal recurring items.
Certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting principals
have been omitted or condensed. It is suggested that the condensed consolidated
financial statements be read in conjunction with the financial statements and
notes thereto included in the Company's Annual Report for the year ended January
30, 1999. The results of operations for the periods ended July 31, 1999, may not
necessarily be indicative of the operating results for the full year.
NOTE 2 - BUSINESS VENTURES
- --------------------------
Effective June 25, 1999, BrainPlay.com, Inc., an unaffiliated entity, and the
Company, through wholly owned subsidiaries, formed a new limited liability
company, KBKids.com LLC to operate an online retail business offering toys,
video games, software, videos and other children's products. The Company will
contribute $80 million, as scheduled, by November 1, 1999, to the new entity in
addition to K-B Toys buying, merchandising and other management expertise.
BrainPlay.com, Inc. contributed substantially all of its assets including its
Web site, its technology infrastructure and its management team. KBKids.com LLC,
is 80% owned by subsidiaries of the Company and 20% by BrainPlay.com, Inc.
Results of operations and the effect of this transaction on the Company's
financial position and cash flows for the quarter ended July 31, 1999 were
immaterial.
<PAGE> 7
CONSOLIDATED STORES CORPORATION AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
OVERVIEW
Consolidated Stores Corporation is a leading value retailer specializing in
closeout merchandise and toys. The Company is the largest retailer of closeout
products and the largest enclosed shopping mall-based toy retailer in the United
States. The Company's goal is to build upon its leadership position in closeout
retailing, a growing segment of the retailing industry, and toy retailing by
expanding its market presence in both existing and new markets. The Company
believes that the combination of its strengths in merchandising, purchasing,
site selection, distribution and cost-containment has made it a low-cost, value
retailer well-positioned for future growth.
At July 31, 1999, a total of 2,504 stores in all 50 states and Puerto Rico.
Retail operations are conducted primarily under the following names:
Closeout Toy
---------------------------------- -----------------------------
Odd Lots K-B Toys
Big Lots K-B Toy Works
Big Lots Furniture K-B Toy Outlet
Mac Frugal's Bargains - Close-outs KBKids.com
Pic `N' Save
Wholesale operations are conducted through Consolidated International and
Wisconsin Toy.
The Company has historically experienced, and expects to continue to experience,
seasonal fluctuations with a significant percentage of its net sales and income
being realized in the fourth fiscal quarter. In addition, the Company's
quarterly results can be affected by the timing of store openings and closings,
the amount of net sales contributed by new and existing stores and the timing of
certain holidays. Quarterly fluctuations in inventory balances are normal
reflecting the opportunistic purchases available at any given time and the
expansion of the Company's store base. Historically, on a per store basis,
inventory levels are lower at the end of the Company's fiscal year and build
through the remaining three quarters of the year to a peak level in the third
quarter. Accounts payable generally follow a trend similar to inventories.
RESULTS OF OPERATIONS
The following tables reflects the number of stores in operation at the end of
each period and compares components of the statement of income as a percent of
net sales.
July 31, August 1,
1999 1998
-------- ---------
Retail stores in operation at end of period:
Closeout 1,177 1,050
Toy 1,327 1,267
-------- ---------
2,504 2,317
-------- ---------
<PAGE> 8
CONSOLIDATED STORES CORPORATION AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
<TABLE>
<CAPTION>
Thirteen weeks ended Twenty-six weeks ended
July 31, August 1, July 31, August 1,
1999 1998 1999 1998
-------- --------- -------- ---------
(Percent to total net sales)
<S> <C> <C> <C> <C>
Net sales 100.0% 100.0% 100.0% 100.0%
Gross Profit 41.4 41.5 41.5 41.4
Selling and administrative expenses 41.5 39.6 41.7 40.1
- --------------------------------------------- --------- -------- ---------
Operating profit (loss) (0.1) 1.9 (0.2) 1.3
Interest expense 0.7 0.7 0.5 0.6
- --------------------------------------------- --------- -------- ---------
Income (loss) before income taxes (0.8) 1.2 (0.7) 0.7
Income taxes (0.3) 0.5 (0.3) 0.3
- --------------------------------------------- --------- -------- ---------
Net income (loss) (0.5)% 0.7% (0.4)% 0.4%
- --------------------------------------------- --------- -------- ---------
</TABLE>
SALES. Net sales for the thirteen and twenty-six week periods ended July 31,
1999, increased 12.9% and 12.5%, respectively. These increases reflect the
greater number of stores in operation for each period of 1999 in addition to
comparable store sales increases of 5.4% for the quarter and 5.5% for the year
to date period.
Net sales by operating segment were as follows:
<TABLE>
<CAPTION>
THIRTEEN WEEKS ENDED ($ in thousands)
-----------------------------------------------------------
July 31, 1999 August 1, 1998
-------------------------- --------------------------- Percentage
Operating Segment $ % $ % Change
- ----------------- ---------- ---------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Closeout $634,134 68.2% $551,415 66.9% 15.0%
Toys 288,164 31.0 263,740 32.0 9.3
Other 7,504 0.8 8,715 1.1 (13.9)
- ----------------------------------------- ---------- ---------- ----------- -----------
$929,802 100.0% $823,870 100.0% 12.9%
- ----------------------------------------- ---------- ---------- ----------- -----------
</TABLE>
<TABLE>
<CAPTION>
TWENTY-SIX WEEKS ENDED ($ in thousands)
-----------------------------------------------------------
July 31, 1999 August 1, 1998
-------------------------- --------------------------- Percentage
$ % $ % Change
---------- ---------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Closeout $1,267,192 68.4% $1,109,048 67.3% 14.3%
Toys 567,332 30.6 518,236 31.5 9.5
Other 19,025 1.0 19,888 1.2 (4.3)
- ----------------------------------------- ---------- ---------- ----------- -----------
$1,853,549 100.0% $1,647,172 100.0% 12.5%
- ----------------------------------------- ---------- ---------- ----------- -----------
</TABLE>
<PAGE> 9
CONSOLIDATED STORES CORPORATION AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Comparable store sales by operating segment were as follows:
Thirteen weeks ended Twenty-six weeks ended
---------------------- ----------------------
July 31, August 1, July 31, August 1,
1999 1998 1999 1998
-------- --------- -------- ---------
Closeout 6.8% (2.5)% 6.7% (0.1)%
Toys 2.4% 0.0 % 3.1% (1.5)%
----------------------------- --------- -------- ---------
Total 5.4% (1.7)% 5.5% (0.5)%
----------------------------- --------- -------- ---------
GROSS PROFIT. Gross profit as a percent of net sales was 41.4% for the second
quarter of fiscal 1999 compared to 41.5% in the same 1998 period. Gross profit
was 41.5% and 41.4% for the first six months of fiscal 1999 and 1998,
respectively. The decline in Closeout Stores gross profit percentage is
reflective of increased import freight costs over the prior year partially
offset by improved markdown performance. The change in Toy Stores gross profit
percentage is primarily associated with the mix of sales in lower margin
categories.
Components of gross profit as a percent to each operating segments sales were as
follows:
Thirteen weeks ended Twenty-six weeks ended
---------------------- ----------------------
July 31, August 1, July 31, August 1,
Operating Segment 1999 1998 1999 1998
------------------- -------- --------- -------- ---------
Closeout 42.7% 42.9% 43.1% 43.2%
Toys 38.7 39.2 38.5 38.2
Other 32.0 23.9 27.1 24.5
----------------------------- --------- -------- ---------
41.4% 41.5% 41.5% 41.4%
----------------------------- --------- -------- ---------
SELLING AND ADMINISTRATIVE EXPENSES. As a percent to net sales, selling and
administrative expenses were 41.5% in the second quarter of fiscal 1999 and
41.7% for the year to date period. In the respective periods of fiscal 1998
selling and administrative expenses were 39.6% and 40.1%. Fiscal 1998 selling
and administrative expenses were below normal levels reflective of lower costs
attributable to the reduced flow of merchandise to Closeout stores during that
period.
INTEREST EXPENSE. Interest expense decreased slightly in the second quarter of
1999 and increased $0.7 million, or 7.2%, for the year to date period. The
change in interest expense reflects higher average debt levels on borrowings for
seasonal operating requirements and capital expenditures offset to some extent
by lower effective interest rates.
INCOME TAXES. The effective tax rate of the Company is anticipated to be 39.5%
in fiscal 1999 compared to 39.0% in fiscal 1998. This increase is primarily
associated with state and local taxes.
<PAGE> 10
CONSOLIDATED STORES CORPORATION AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
CAPITAL RESOURCES AND LIQUIDITY
Effective June 25, 1999, BrainPlay.com, Inc., an unaffiliated entity, and the
Company, through wholly owned subsidiaries, formed a new limited liability
company, KBKids.com LLC to operate an online retail business offering toys,
video games, software, videos and other children's products. The Company will
contribute $80 million, as scheduled, by November 1, 1999, to the new entity in
addition to K-B Toys buying, merchandising and other management expertise.
BrainPlay.com, Inc. contributed substantially all of its assets including its
Web site, its technology infrastructure and its management team. KBKids.com LLC,
is 80% owned by subsidiaries of the Company and 20% by BrainPlay.com, Inc. As of
July 31, 1999, the Company contributed $10 million of its commitment. A
substantial amount of the Company's $80 million commitment for the KBKids.com
LLC Website operation will be expended in the third quarter of 1999 and it is
anticipated the KBKids.com LLC operation will record substantial pretax
operating losses for the balance of fiscal 1999.
The primary sources of liquidity for the Company have been cash flow from
operations and as necessary borrowings under available credit facilities.
Working capital at July 31, 1999, was $938.6 million compared to $857.3 million
at August 1, 1998. For the twenty-six week periods ended July 31, 1999, and
August 1, 1998, net cash used by operations was $156.0 million and $235.7
million and capital expenditures were $77.6 million and $86.6 million,
respectively. The reduction of cash used by operations is mainly attributable to
the reduction of inventory level increases in the comparative year to date
periods and improved accounts payables leverage.
The Company has a Revolving Credit Facility which provides senior bank financing
in an aggregate principal amount of up to $700 million. The facility has a
maturity date of May 15, 2003. From time-to-time the Company also utilizes
uncommitted credit facilities, subject to the terms of the Revolving Credit
Facility, to supplement short-term borrowing requirements. At July 31, 1999,
approximately $169.3 million was available for borrowings under the Revolving
Credit Facility and $159.7 million of uncommitted credit facilities were
available.
The funding commitment and anticipated pretax operating losses of the KBKids.com
LLC operation for the balance of fiscal 1999 are not expected to have a
significant impact on the Company's ability to fund ongoing operating
requirements and future capital expenditures related to the expansion of
existing businesses and development of new projects. Additionally, management is
not aware of any current trends, events, demands, commitments, or uncertainties
which reasonably can be expected to have a material impact on the liquidity,
capital resources, financial position or results of operations of the Company.
ACCOUNTING PRONOUNCEMENTS
The Financial Accounting Standards Board has issued Statement of Financial
Accounting Standards No. 133, "Accounting for Derivative Instruments and Hedging
Activities" (FAS 133), which is effective for quarters beginning after June 15,
2000. FAS 133 requires all derivatives to be recorded on the balance sheet at
fair value and establishes accounting treatment for various types of hedges. The
Company has a limited exposure to derivative products and is analyzing the
implementation requirements of FAS 133. No material impact on reported results
is currently anticipated after the adoption of FAS 133.
IMPACT OF YEAR 2000
The "Year 2000" issue arose because many existing computer programs use a
two-digit format, as opposed to four digits, to refer to a year. These programs,
if not corrected, could fail or create erroneous results after the century date
changes
<PAGE> 11
CONSOLIDATED STORES CORPORATION AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
on January 1, 2000, or when otherwise dealing with dates later than December 31,
1999. This "Year 2000" issue is believed to affect virtually all companies and
organizations, including the Company.
Since 1990 the Company has been evaluating, assessing and adjusting all known
date-sensitive systems and equipment for "Year 2000" compliance. The scope of
this effort includes internally developed information technology (IT) systems,
purchased and leased software, embedded systems, and electronic data interchange
transaction processing. The Company also instituted and maintains strict
policies regarding standards for all Network Servers and software, desktop and
laptop computers, operating systems, desktop software and applications, and
communication routers and hubs. The monitoring of "Year 2000" risks has
significantly enhanced the Company's readiness enabling the quick deployment and
testing of compliant hardware and software as it is developed. In 1996 the
Company initiated a "Year 2000" Compliance Committee which inventoried
internally developed production systems and identified those and the data files
which needed to be modified.
In 1997 all package software applications were evaluated to determine which were
not "Year 2000" compliant and a plan was developed for either updating or
eliminating these applications. Also evaluated to determine "Year 2000"
readiness were all computer hardware and operating systems including AS400's,
RISC 6000's, Tandems, servers, PC's and cash registers. The evaluation phase of
the "Year 2000" project is substantially complete and included both IT, such as
noted above, and non-IT equipment, such as warehouse sortation and security
systems.
Substantially all of the Company's operating IT systems are "Year 2000"
compliant and based on the assessment efforts to date, the Company does not
believe that the "Year 2000" issue will have a material adverse effect on its
financial condition or results of operations. However, all situations cannot be
anticipated and, there can be no assurance of timely compliance by third
parties, such as utility companies, government agencies or merchandise
suppliers, which may have an adverse effect on the Company. The Company operates
a large number of geographically dispersed stores and procures its merchandise
for resale and supplies for operational purposes from a vast network of vendors
located both within and outside the United States. The Company is not dependent
on any one vendor for more than 4% of its merchandise purchases. The established
relationships with key vendors are a valued asset, however, substitute products
for most of the goods available for sale in the closeout stores may be obtained
from other vendors. If certain vendors are unable to deliver product on a timely
basis, due to their own "Year 2000" issues, it is anticipated others would be
capable to deliver similar goods. Approximately 20% of the Company's merchandise
is imported, and any significant disruptions in the global transportation
industry, including a delay in the processing of merchandise through customs,
could cause a material adverse impact on the Company's operations. The Company
intends to allocate internal resources and retain dedicated consultants as
necessary to be ready to take action if these events occur.
To date, the Company has not established a formal contingency plan for possible
"Year 2000" issues. Where needed, the Company will establish contingency plans
based on actual testing experience and assessment of outside risks. It is
expected that any formal contingency plans will be in place by calendar year
end.
The Company has incurred to date approximately $5 million of costs to implement
its "Year 2000" compliance program and presently expects to incur not more than
$1 million of additional costs in the aggregate. All of the Company's "Year
2000" compliance costs have been or are expected to be funded from the Company's
operating cash flow. The Company's "Year 2000" compliance budget does not
include material amounts for hardware replacement because the Company has
historically employed a strategy to continually upgrade its mainframe and
midrange computer systems and to update systems with respect to both preexisting
operations and in conjunction with the acquisitions and mergers effected by the
Company in recent years. Consequently, the Company's "Year 2000" budget has not
required the diversion of funds from or the postponement of the implementation
of other planned IT projects.
The cost of the conversions and the completion dates are based on management's
best estimates and may be updated as additional information becomes available.
Readers are referred to SAFE HARBOR STATEMENT UNDER THE PRI-
<PAGE> 12
CONSOLIDATED STORES CORPORATION AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
VATE SECURITIES LITIGATION REFORM ACT OF 1995 of this report, which addresses
forward-looking statements made by the Company.
SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995
All forward-looking statements (as such term is defined in the Private
Securities Litigation Reform Act of 1995) contained in this Form 10-Q or made by
management of the Company involve risks and uncertainties and are subject to
change based on various important factors, many of which may be beyond the
Company's control. Accordingly, the Company's future performance and financial
results may differ materially from those expressed or implied in any such
forward-looking statements. Among other things, the foregoing statements as to
costs and dates relating to the Year 2000 effort are forward-looking and are
based on the Company's current best estimates that may be proven incorrect as
additional information becomes available. The Company's Year 2000 related
forward-looking statements are also based on assumptions about many important
factors, including the technical skills of employees and independent
contractors, the representations and preparedness of third parties, the ability
of vendors to deliver merchandise or perform services required by the Company
and the collateral effects of the Year 2000 issues on the Company's business
partners and customers. While the Company believes its assumptions are
reasonable, it cautions that it is impossible to predict factors that could
cause actual costs or timetables to differ materially from the expected results.
In addition to Year 2000 issues, the following factors, among others, in some
cases have affected and in the future could affect the Company's financial
performance and actual results and could cause actual results for 1999 and
beyond to differ materially from those expressed or implied in any
forward-looking statements included in this Form 10-Q or otherwise made by
management: changes in consumer spending patterns, consumer preferences and
overall economic conditions, the impact of competition and pricing, changes in
weather patterns, political stability, currency and exchange risks and changes
in existing or potential duties, tariffs or quotas, availability of suitable
store locations at appropriate terms, ability to develop new merchandise and
ability to hire and train associates.
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 therein will not be realized. Readers are also
urged to carefully review and consider the various disclosures made by the
Company which attempt to advise interested parties of the factors which affect
the Company's business, including Management's Discussion and Analysis of
Financial Condition and Results of Operations included in this report.
<PAGE> 13
PART II - OTHER INFORMATION
Item 1. Legal Proceedings. Not applicable.
Item 2. Changes in Securities. Not applicable.
Item 3. Defaults Upon Senior Securities. Not applicable.
Item 4. Submission of Matters to Vote of Security Holders.
(a) The Company's Annual Meeting was held on May 18,
1999.
(b) The number of shares of voting Common Stock, $.01
par value per share, outstanding as of March 26,
1999, the record date, was 109,901,936.
(c) The number of shares of Common Stock of the
Company represented in person or by proxy and
eligible to vote was 97,880,087.
(d) Proxies were solicited by management pursuant to
Regulation 14 under the Securities Exchange Act of
1934. There was no solicitation in opposition to
management's nominees as listed in the proxy
statement. All of the nominee's were elected
pursuant to a vote of the stockholders.
(e) To transact other business as properly presented
before the meeting.
The vote on this proposal was:
55,854,279 20,531,027 21,757,585
---------- ---------- ----------
(For) (Against) (Abstain)
Item 5. Other Information.
None.
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits.
Exhibit No. Document
----------- -----------------------
27 Financial Data Schedule
(b) Reports on Form 8-K.
None.
<PAGE> 14
SIGNATURE
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.
CONSOLIDATED STORES CORPORATION
-------------------------------
(Registrant)
Dated: September 13, 1999 By: /s/ Michael J. Potter
------------------ ---------------------------------------------
Michael J. Potter, Executive Vice President,
Chief Financial Officer, and Principal
Accounting Officer
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial data extracted from Consolidated Stores
Corporation and Subsidiaries Consolidated Financial Statements filed in Form
10-Q as of July 31, 1999, and the fiscal year then ended, and is qualified in
its entirety by reference to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JAN-29-2000
<PERIOD-START> JAN-31-1999
<PERIOD-END> JUL-31-1999
<CASH> 83,800
<SECURITIES> 0
<RECEIVABLES> 11,442
<ALLOWANCES> 0
<INVENTORY> 1,274,334
<CURRENT-ASSETS> 1,552,942
<PP&E> 1,184,658
<DEPRECIATION> 471,779
<TOTAL-ASSETS> 2,310,929
<CURRENT-LIABILITIES> 614,358
<BONDS> 380,838
0
0
<COMMON> 1,102
<OTHER-SE> 1,188,159
<TOTAL-LIABILITY-AND-EQUITY> 2,310,929
<SALES> 1,853,549
<TOTAL-REVENUES> 1,853,549
<CGS> 1,083,653
<TOTAL-COSTS> 1,856,528
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 10,471
<INCOME-PRETAX> (13,450)
<INCOME-TAX> (5,313)
<INCOME-CONTINUING> (8,137)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (8,137)
<EPS-BASIC> (0.07)
<EPS-DILUTED> (0.07)
</TABLE>
