SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For Quarter Ended July 30, 1994 Commission File Number 1-6166
PETRIE STORES CORPORATION
(Exact Name of Registrant as specified in its Charter)
New York 36-2137966
(State of Incorporation) (I.R.S. Employer Identification No.)
70 Enterprise Avenue
Secaucus, New Jersey 07094
(Address of principal (Zip Code)
executive offices)
(201) 866-3600 NONE
----
(Registrant's Telephone Number) Former name, former address
and former fiscal year, if
changed since last report.
Indicate by check mark 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 (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 _
-
Number of shares outstanding at July 30, 1994, 46,774,900 shares, $1.00 par
value, common stock.
1 0f 13
<PAGE>
PETRIE STORES CORPORATION AND SUBSIDIARIES
INDEX
PAGE NO.
--------
Part I - Financial Information (Unaudited):
Consolidated Balance Sheets
July 30, 1994 and January 29, 1994 ................... 3 & 4 of 13
Consolidated Operations - Three Months and Six Months
Ended July 30, 1994 and July 31, 1993................ 5 of 13
Consolidated Additional Paid-In Capital and
Consolidated Retained Earnings - Six Months
Ended July 30, 1994.................................. 6 of 13
Consolidated Cash Flows - Six Months
Ended July 30, 1994 and July 31, 1993................ 7 of 13
Notes................................................ 8 & 9 of 13
Management's Discussion and Analysis of Financial
Condition and Results of Operations.................10 & 11 of 13
Part II - Other Information................................... 12 of 13
Signature..................................................... 12 of 13
Exhibits:
Exhibit A - Independent Accountants' Report -
David Berdon & Co................................... 13 of 13
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<PAGE>
PETRIE STORES CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
---------------------------
(In thousands of dollars)
July 30, January 29,
1994 1994
---- ----
ASSETS (Unaudited)
Current Assets:
Cash and short-term investments.................. $ 27,336 $ 39,290
Investments in common stock (Note 2)............. 0 35,740
Accounts receivable:
Trade, less allowance for doubtful accounts of
$2,450......................................... 53,194 49,999
Other........................................... 11,677 13,745
Merchandise inventories.......................... 231,762 187,627
Prepaid expenses and sundry receivables ......... 19,101 6,887
Deferred income taxes............................ 7,456 7,456
------ ------
TOTAL CURRENT ASSETS........................ 350,526 340,744
------- -------
Investments:
Investments in common stock (Notes 2 and 3)...... 1,369,961 1,481,937
--------- ---------
Property and Equipment, at Cost:
Land............................................. 2,777 2,777
Buildings and improvements....................... 16,398 16,157
Leasehold costs, improvements, store fixtures and
equipment....................................... 617,211 588,450
------- -------
636,386 607,384
Less accumulated depreciation and amortization... 366,875 339,409
------- -------
269,511 267,975
------- -------
Excess of Cost Over the Fair Value of Net
Assets Acquired,
Less accumulated amortization of $29,646 at
7/30/94 and $28,176 at 1/29/94.................. 88,132 89,602
------ ------
Other Assets:
Debt issuance costs, less accumulated amortization
of $608 at 7/30/94 and $574 at 1/29/94........... 1,121 1,155
Other............................................. 6,369 6,394
----- -----
7,490 7,549
----- -----
$2,085,620 $2,187,807
========= =========
See notes to consolidated financial statements.
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<PAGE>
PETRIE STORES CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
---------------------------
(In thousands of dollars)
July 30, January 29,
1994 1994
---- ----
(Unaudited)
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Short-term borrowings.............................. $ 46,477 $ 20,000
Accounts payable................................... 37,468 26,993
Accrued expenses and other liabilities............. 38,536 44,917
------ ------
TOTAL CURRENT LIABILITIES 122,481 91,910
------- ------
Long-Term Liabilities:
Convertible subordinated debentures................ 124,811 124,952
Deferred income taxes (Note 2)..................... 554,708 600,678
Other.............................................. 5,384 5,704
------- -------
684,903 731,334
------- -------
Commitments and Contingencies (Note 5)
Shareholders' Equity:
Common stock, par value $1 per share: authorized
80,000,000 shares, issued 46,776,569 shares at
7/30/94 and 46,770,202 shares at 1/29/94......... 46,777 46,770
Additional paid-in capital........................ 94,107 93,973
Retained earnings................................. 443,457 462,079
Unrealized gain on investment in common stock,
net (Note 2)..................................... 693,931 761,777
------- -------
1,278,272 1,364,599
Less:
Treasury stock - at cost (1,669 shares)........... 36 36
--------- --------
TOTAL SHAREHOLDERS' EQUITY................... 1,278,236 1,364,563
--------- ---------
$2,085,620 $2,187,807
========= =========
See notes to consolidated financial statements.
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<PAGE>
PETRIE STORES CORPORATION AND SUBSIDIARIES
CONSOLIDATED OPERATIONS
(UNAUDITED)
-----------
(In thousands except per share amounts)
<TABLE>
Three Months Ended Six Months Ended
------------------ ----------------
July 30, July 31, July 30, July 31,
1994 1993 1994 1993
---- ---- ---- ----
<C> <S> <S> <S> <S>
Revenues:
Net Sales.................... $360,387 $362,331 $697,912 $694,113
Other Income................. 1,168 1,576 2,446 3,492
------- ------- ------- -------
361,555 363,907 700,358 697,605
------ ------- ------- -------
Cost of Goods Sold, Buying and
Occupancy Costs............... 292,730 291,278 540,048 536,101
Selling, General and
Administrative Expenses....... 89,104 90,571 174,575 173,770
Interest Expense............... 2,765 2,685 5,702 5,300
Nonrecurring Expenses (Note 3). 1,972 0 3,272 0
Restructuring Charge........... 0 35,000 0 35,000
----- ------ ----- ------
386,571 419,534 723,597 750,171
------- ------- ------- -------
(Loss) from Investment in Common
Stock.......................... 0 0 0 (13,661)
------- ------ ------- --------
(Loss) from Continuing Operations
Before Income Taxes and
Cumulative Effect of Accounting
Change for Income Taxes........ (25,016) (55,627) (23,239) (66,227)
------- ------- ------- -------
Income Taxes:
Federal....................... (6,317) (10,647) (5,697) (10,043)
State and Local............... (1,530) (2,285) (1,423) (2,041)
Deferred...................... (2,324) (10,300) (2,176) (15,270)
------- -------- ------- --------
(10,171) (23,232) (9,296) (27,354)
-------- -------- ------- --------
(Loss) before Cumulative Effect
of Accounting Change for Income
Taxes.......................... (14,845) (32,395) (13,943) (38,873)
Cumulative Effect of Accounting
Change for Income Taxes........ 0 0 0 2,800
------- ------- ------ ------
Net (Loss)...................... $(14,845) $(32,395) $(13,943)$(36,073)
======= ======= ====== ======
Earnings (Loss) per Share
(Note 4):
(Loss) before Cumulative Effect
of Accounting Change for Income
Taxes......................... $(.32) $(.69) $(.30) $(.83)
Cumulative Effect of Accounting
Change for Income Taxes....... 0 0 0 .06
---- ---- ---- ----
Net (Loss)..................... $(.32) $(.69) $(.30) $(.77)
===== ===== ===== =====
Dividends Per Share.............. $.05 $.05 $.10 $.10
===== ===== ===== =====
Weighted Average Number of Shares 46,774 46,768 46,772 46,768
====== ====== ====== ======
</TABLE>
See notes to consolidated financial statements.
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<PAGE>
PETRIE STORES CORPORATION AND SUBSIDIARIES
CONSOLIDATED ADDITIONAL PAID-IN CAPITAL
(Unaudited)
-----------
(In thousands of dollars)
Balance January 30, 1994................................... $ 93,973
Conversion of debentures................................... 134
------
Balance July 30, 1994...................................... $ 94,107
======
PETRIE STORES CORPORATION AND SUBSIDIARIES
CONSOLIDATED RETAINED EARNINGS
(Unaudited)
-----------
(In thousands of dollars)
Balance January 30, 1994...................................... $ 462,079
Net (loss) for the six months ended July 30, 1994............. (13,943)
Cash dividends on common stock................................ (4,679)
-------
Balance July 30, 1994......................................... $ 443,457
=======
See notes to consolidated financial statements.
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<PAGE>
PETRIE STORES CORPORATION AND SUBSIDIARIES
CONSOLIDATED CASH FLOWS
(Unaudited)
-----------
(In thousands of dollars)
Six Months Ended
----------------
July 30, July 31,
1994 1993
---- ----
Cash flows from operating activities:
Net (loss)................................. $ (13,943) $ (36,073)
Adjustments to reconcile net (loss) to net
cash (used in) operating activities:
Depreciation and amortization of property
and equipment........................... 27,466 30,549
Other amortization....................... 1,562 1,562
Loss on disposal of property and equipment 0 23,625
Compensation in connection with stock
options................................. 0 339
Loss from investment in common stock..... 0 13,661
Deferred taxes........................... (2,176) (15,270)
Cumulative effect of accounting change for
income taxes............................ 0 (2,800)
Changes in assets and liabilities:
(Increase) in:
Accounts receivable.................... (1,127) (8,421)
Merchandise inventories................ (44,135) (59,322)
Prepaid expenses and sundry receivables (12,214) (3,986)
Other assets........................... (33) (3,739)
Increase (decrease) in:
Accounts payable....................... 10,475 15,527
Accrued expenses and other liabilities. (6,381) 2,486
Income taxes........................... 0 (9,231)
Other long-term liabilities............ (320) 3,702
Proceeds from sale of investment in common
stock-trading securities................. 36,076 0
------ -----
Net cash (used in) operating activities..... (4,750) (47,391)
------ ------
Cash flows from investing activities:
Additions to property and equipment........ (29,002) (35,141)
Sale of investments........................ 0 5,254
------ ------
Net cash (used in) investing activities..... (29,002) (29,887)
------- --------
Cash flows from financing activities:
Net short-term borrowings.................. 26,477 15,000
Cash dividends............................. (4,679) (4,676)
------ ------
Net cash provided by financing activities... 21,798 10,324
------ ------
Net (decrease) in cash and short-term
investments................................ (11,954) (66,954)
Cash and short-term investments - beginning
of period.................................. 39,290 82,270
------ ------
Cash and short-term investments - end of
period..................................... $ 27,336 $ 15,316
====== ======
Supplemental disclosures of cash flow
information:
Cash paid during the period for:
Interest................................... $ 5,077 $ 5,221
Income taxes............................... $ 1,158 6,010
Supplemental disclosure of noncash investing and financing activities:
$141,000 of Convertible Subordinated Debentures were exchanged for 6,367
shares of the Company's common stock during the six months ended July 30, 1994.
See notes to consolidated financial statements.
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<PAGE>
PETRIE STORES CORPORATION AND SUBSIDIARIES
------------------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 1
- - -----
In the opinion of the Company, the accompanying unaudited consolidated
financial statements contain all adjustments (consisting of only normal
recurring accruals) necessary to present fairly the financial position as of
July 30, 1994 and the results of operations for the three and six months ended
July 30, 1994 and July 31, 1993 and cash flows for the six months ended
July 30, 1994 and July 31, 1993.
The results of operations for the six months ended July 30, 1994 are not
necessarily indicative of the results to be expected for the full year.
Note 2 - Investments in Common Stock
- - ------------------------------------
At July 30, 1994, the Company's investment in common stock consists of
Toys "R" Us, Inc. ("Toys") (39,853,403 shares - 13.99%) - A chain of toy
specialty retail stores. Effective January 29, 1994, the Company adopted
SFAS No. 115, "Accounting for Certain Investments in Debt and Equity
Securities". Accordingly, investments in common stock classified as available
for sale securities are being carried at market value of $1,369,961,000 with
the unrealized gain of $693,931,000 ($1,214,931,000 less deferred income
taxes of $521,000,000) included in shareholders' equity at July 30, 1994.
At January 29, 1994, the unrealized gain of $761,777,000 ($1,326,777,000
less deferred income taxes of $565,000,000) was credited to shareholders'
equity.
Note 3 - Nonrecurring Expenses
- - ------------------------------
Nonrecurring expenses relate primarily to legal and real estate
consulting expenses incurred in connection with the acquisition agreement
entered into with Toys in April 1994 (See Note 5).
Note 4 - Earnings (Loss) Per Share
- - ----------------------------------
Primary earnings (loss) per share has been computed based on the weighted
average number of shares outstanding.
Fully diluted earnings per share has been computed based on the weighted
average number of common and common equivalent shares outstanding assuming
exercise of dilutive stock options computed by the treasury stock method and
the conversion of the 8% Convertible Subordinated Debentures after
elimination of interest (net of taxes) on the convertible debentures. Fully
diluted earnings per share are not presented for the three months and six
months ended July 30, 1994 and three months and six months ended July 31,
1993 as the effect would be anti-dilutive. Weighted average number of shares
for computing fully diluted earnings per share was as follows:
Three Months Ended Six Months Ended
------------------ -----------------
July 30, 1994 July 31, 1993 July 30, 1994 July 31, 1993
------------- ------------- ------------- -------------
52,414,000 52,416,000 52,411,000 52,463,000
Note 5 - Commitments and Contingencies
- - ---------------------------------------
On August 23, 1994, the Company entered into a Stock Purchase Agreement
(the "Stock Purchase Agreement") with an investor group ("Buyer"). Pursuant
to the Stock Purchase Agreement, Buyer will purchase the shares of common
stock (the "Stock Purchase") in a Delaware subsidiary of the Company ("Retail
Holding Company"), to which all of the retail operations of the Company will
have been transferred prior to the closing date of the Stock Purchase.
The purchase price will be $190 million in cash (the "Purchase Price").
The closing of the Stock Purchase is conditioned upon, among other things,
the closing of the Company's share exchange transaction with Toys "R" Us, Inc.
("Toys"), pursuant to an Acquisition Agreement between the Company and Toys,
dated as of April 20, 1994 (the "Toys Agreement"). The Toys Agreement
provides that the Company will transfer all of the common stock, par value
$.10 per share, of Toys ("Toys Shares") held by the Company and its
subsidiaries and cash to Toys in exchange for Toys Shares with an equivalent
value, less approximately $115 million. The closing of the transaction with
Toys is conditioned upon, among other things, the disposition of the
Company's retail operations in a manner to be determined by the Company's
Board of Directors and the Company receiving a private letter ruling from
the Internal Revenue Service to the effect that the transactions contemplated
by the Toys Agreement will not give rise to the recognition by the Company,
its shareholders or Toys of a material amount of taxable income (the "IRS
Ruling"). The Company does not have sufficient information available to
determine if it is probable that it will receive a favorable IRS Ruling.
The Company's
8 of 13
<PAGE>
obligations under both agreements are also conditioned upon, among other
things, the Company reducing its contingent liabilities, primarily retail
lease guarantees, to less than $200 million and the approval of the
transactions contemplated by both agreements by the holders of two-thirds of
the Company's outstanding common shares. As part of the Stock Purchase,
Buyer will assume a substantial portion of the Company's liabilities and the
Company will retain certain contingent liabilities. Promptly after the
closing of the transaction with Toys and the Stock Purchase, the Company
will liquidate and distribute to its shareholders all of the Toys Shares
received in the exchange, except an amount to be held in a liquidating
trust to cover the Company's contingent liabilities at the closing of the
Toys transaction. The Buyer's obligations to close the Stock Purchase are
conditioned upon, among other things, its receipt of financing and the
Company's receipt of sufficient consents from landlords. The Stock Purchase
may be terminated if it is not consummated by January 31, 1995.
If the above-mentioned transactions do occur, the result would be the
complete liquidation and dissolution of the Company, through the
establishment of the Liquidating Trust and the distribution to the Company's
shareholders of Toys common stock received by the Company in the Exchange,
and pro rata interests in the Liquidating Trust. These transactions
will be recorded as a dividend and result in a reduction in the equity of
the Company to zero. In addition, at such time, when it becomes probable
that these transactions will occur, the Company would recognize a loss on
the disposition of its retail operations based upon the difference between
the consideration received on the sale and the carrying value of such retail
operations. The loss is currently estimated to be approximately $400 million.
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<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
---------------------------------------------------------------
RESULTS OF OPERATIONS
---------------------
Revenues
- - -------
Net sales decreased $1,944,000 (.5%) and increased $3,799,000 (.5%) for
the three-month and six-month periods ended July 30, 1994 as compared to the
corresponding periods last year. The decrease for the three-month period
was due to a decrease in comparable store sales of approximately $5,000,000
(1.5%) offset by an increase in non comparable store sales of approximately
$3,100,000. The increase for the six-month period was due to an increase in
non comparable store sales of approximately $11,300,000 offset by a decrease
of $7,500,000 (1.2%) in comparable store sales.
Other income decreased $408,000 and $1,046,000 for the three-month and
six-month periods ended July 30, 1994 as compared to the corresponding
periods last year due to a decrease in temporary investments.
Cost of Goods Sold, Buying and Occupancy Costs (CGS)
- - ----------------------------------------------------
As a percentage of sales, CGS increased .8% for the three-month period
ended July 30, 1994 as compared to the corresponding period last year
primarily due to a 1.6% decrease in gross margin, offset by a .3% decrease
in occupancy costs and a .4% decrease in buying and distribution costs.
As a percentage of sales, CGS increased .2% for the six-month period
ended July 30, 1994 as compared to the corresponding period last year
primarily due to a .7% decrease in gross margin as a result of increased
markdowns, offset by a .1% decrease in occupancy costs and a .4% decrease in
buying and distribution costs.
Selling, General & Administrative Expenses (S,G&A)
- - --------------------------------------------------
S,G&A as a percentage of sales decreased .3% for the three-month period
ended July 30, 1994 as compared to the corresponding period last year
primarily due to a decrease of .2% in costs associated with store closings,
a decrease of .2% in depreciation, a decrease of .2% in costs associated with
processing the Company's private label credit cards and a decrease of .2% in
various costs in servicing the stores offset by an increase of .6% in payroll
and employee related costs.
S,G&A as a percentage of sales was approximately the same for the six-month
period ended July 30, 1994 as compared to the corresponding period last year.
An increase of .5% in payroll and employee related costs was offset by a
decrease of .1% in depreciation, a decrease of .1% in costs associated with
store closings and a decrease of .2% in costs associated with processing
the Company's private label credit cards.
Interest Expense
- - ----------------
Interest expense relates primarily to the 8% Convertible Subordinated
Debentures. The increase in interest expense during the three-month and
six-month periods ended July 30, 1994 as compared to the corresponding
periods last year is due to interest expense associated with the Company's
short-term borrowings.
Nonrecurring Expenses
- - ---------------------
Nonrecurring expenses relate primarily to legal and real estate consulting
expenses in connection with the acquisition agreement with Toys (See Notes 3
and 5).
Restructuring Charge
- - --------------------
As part of the Company's review of its operations in fiscal 1994,
management had identified approximately 290 stores it expected to close over
the next few years. The restructuring charge of $35,000,000 related
primarily to the write-down of fixed assets and lease settlements associated
with these expected store closings over the next few years. In connection
with this restructuring plan, the Company closed 41 stores during the
six-month period ended July 30, 1994. Costs in connection with these stores
along with severance payments made during the six months ended July 30, 1994
accounts for approximately $4,500,000 of the original $35,000,000
restructuring provision. The remaining restructuring provision for stores
not yet closed and severance payments not yet due amount to approximately
$18,500,000 as of July 30, 1994. The only significant cost savings due to
the restructuring was a reduction in depreciation expense for the three-month
and six-month periods ended July 30, 1994 of approximately $1,300,000 and
$2,300,000, respectively as a result of the elimination of depreciation
expense associated with the stores that have not yet been closed as of
July 30, 1994.
(Loss) From Investment in Common Stock
- - --------------------------------------
The loss from investment in common stock represents the write-down of the
Company's investment in Deb Shops, Inc. ("Debs") to market value as of
May 1, 1993.
Income Taxes
- - ------------
The provision for income taxes as a percentage of (loss) before income
taxes decreased for the three-month and six-month periods ended July 30, 1994
as compared to the corresponding periods last year primarily due to an
increase in expenses producing no tax benefit.
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<PAGE>
Cumulative Effect of Accounting Change for Income Taxes
- - -------------------------------------------------------
Effective January 31, 1993, the Company adopted the provisions of
Statement of Financial Accounting Standards (SFAS) No. 109, "Accounting for
Income Taxes," which resulted in a deferred tax benefit of $2,800,000, or
$.06 per share for the six months ended July 31, 1993.
Liquidity and Capital Resources
- - -------------------------------
Pursuant to the acquisition agreement with Toys the Company has
restricted its ability to sell shares of Toys common stock to 4,000,000
shares and has restricted its ability to pledge such shares in connection
with borrowings to $175,000,000 in secured borrowings. Pursuant to the stock
purchase agreement with the investor group, the Company has agreed to maximum
monthly working capital borrowings under a short-term agreement with a
broker. These maximum monthly borrowings range from $10,000,000 to
$150,000,000. As of July 30, 1994 the Company had $46,477,000 outstanding
under this short-term borrowing agreement. These borrowings were used for
capital expenditures, inventory and general working capital requirements. The
Company has $72,500,000 in lines of credit available, principally for
establishing letters of credit with its suppliers. The Company believes that
the foregoing arrangements will be adequate for the cash needs of the
Company to fund operations, capital expenditures and dividends during the
balance of the current fiscal year.
The Company's holdings in Debs were sold in early April 1994 for
approximately $16,800,000 and it also sold a small portion of its holdings
in Toys during June 1994 for approximately $19,200,000 to offset the loss
from the sale of Debs stock, with the proceeds from these sales used to
reduce short-term borrowings.
The decreases in investment in common stock classified as available for
sale securities, deferred income taxes and unrealized gain on investment in
common stock, net from January 29, 1994 is the result of the decrease in
the market value per share of Toys. The Company's merchandise inventories
are historically lower at the end of its fiscal year as compared to the end
of its second quarter due to the seasonal nature of the Company's business.
The Company has budgeted approximately $45,000,000 for capital
expenditures during fiscal 1995 which includes approximately $13,000,000 for
new Point of Sale Registers and associated technology. The funds will be
provided by working capital and short-term borrowing arrangements.
In connection with its Convertible Subordinated Debentures, the Company
is obligated to call such debentures pursuant to the acquisition agreement
with Toys.
The following items measure the Company's ability to meet its
short-term obligations:
July 30, 1994 January 29, 1994
------------- ----------------
Working capital* $228,045,000 $248,834,000
Current ratio 2.9 3.7
*Working capital consists of current assets less current liabilities. The
Company's current ratio has decreased as a result of the Company's loss for
the six months ended July 30, 1994.
See the Consolidated Statements of Cash Flows for an analysis of the sources
and uses of funds for the six months ended July 30, 1994 as compared to the
corresponding period last year.
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<PAGE>
PART II - OTHER INFORMATION
---------------------------
Item 6 - Exhibits and Reports on Form 8-K
(b) There were no reports on Form 8-K filed during the three
months ended July 30, 1994.
- There was a Form 8-K filed on August 23, 1994 regarding the
stock purchase agreement the Company entered into with an
investment group.
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.
PETRIE STORES CORPORATION
-------------------------
(registrant)
September 12, 1994 /S/ Peter A. Left
----------------------------
BY Peter A. Left, Vice
Chairman, Chief Operating
Officer, Chief Financial
Officer and Secretary.
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<PAGE>
INDEPENDENT ACCOUNTANTS' REPORT
-------------------------------
To The Board of Directors
Petrie Stores Corporation
We have reviewed the accompanying consolidated balance sheet of Petrie
Stores Corporation and subsidiaries as of July 30, 1994 and the related
consolidated statements of operations for the three-month and the six-month
periods ended July 30, 1994 and July 31, 1993, and the consolidated
statements of cash flows for the six month periods ended July 30, 1994 and
July 31, 1993, and the consolidated statements of additional paid-in capital
and retained earnings for the six months ended July 30, 1994. These
financial statements are the responsibility of the company's management.
We conducted our reviews in accordance with standards established by the
American Institute of Certified Public Accountants. A review of interim
financial information consists principally of applying analytical procedures
to financial data and making inquiries of persons responsible for financial
and accounting matters. It is substantially less in scope than an audit
conducted in accordance with generally accepted auditing standards, the
objective of which is the expression of an opinion regarding the financial
statements taken as a whole. Accordingly, we do not express such an
opinion.
Based on our reviews, we are not aware of any material modifications that
should be made to the accompanying financial statements for them to be in
conformity with generally accepted accounting principles.
We have previously audited, in accordance with generally accepted auditing
standards, the consolidated balance sheet as at January 29, 1994 (presented
herein), and the related consolidated statements of earnings, shareholders'
equity and cash flows for the year then ended (not presented herein), and
in our report, dated March 24, 1994, we expressed an unqualified opinion on
those consolidated financial statements.
David Berdon & Co.
Certified Public Accountants
New York, New York
September 9, 1994
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