SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
QUARTERLY REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED APRIL 29, 1995 COMMISSION FILE NUMBER: 1-6166
PETRIE STORES CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
NEW YORK 36-2137966
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
70 ENTERPRISE AVENUE
SECAUCUS, NEW JERSEY 07094
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (201) 866-3600
FORMER NAME, FORMER ADDRESS AND FORMER FISCAL YEAR, IF CHANGED SINCE LAST
REPORT: NONE
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:
Indicate the number of shares outstanding of each of the
registrant's classes of common stock as of the latest
practicable date: 52,350,346 shares, $1.00 par value per
share, of common stock outstanding as of June 9, 1995.
INDEX
PART I - FINANCIAL INFORMATION
Page
Item 1. Financial Statements (unaudited)
Statements of Net Assets in Liquidation - April
29, 1995 and January 28, 1995 . . . . . . . . . . 3
Statement of Changes in Net Assets in
Liquidation - For the Three Months Ended
April 29, 1995 . . . . . . . . . . . . . . . . . 4
Consolidated Statement of Operations - For the
Three Months Ended April 30, 1994 . . . . . . . 5
Consolidated Statement of Cash Flows - For the
Three Months Ended April 30, 1994 . . . . . . . . 6
Notes to Consolidated Financial Statements . . . . . 8
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations . . . . 13
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K . . . . . . . . . . . 18
PETRIE STORES CORPORATION
STATEMENTS OF NET ASSETS IN LIQUIDATION (NOTE 2)
(IN THOUSANDS)
April 29, 1995 January 28,
(Unaudited) 1995
_______________ ____________
Assets
Cash and cash equivalents $ 8,415 $ 11,854
Investment in Toys "R" Us, Inc. common stock 403,531 1,262,293
Total assets 411,946 1,274,147
Liabilities
Accrued expenses and other liabilities 7,780 9,495
Deferred income taxes 92,370 428,182
Total liabilities 100,150 437,677
Commitments and contingencies
Net assets in liquidation $311,796 $ 836,470
See accompanying notes.
PETRIE STORES CORPORATION
STATEMENT OF CHANGES IN NET ASSETS IN LIQUIDATION (NOTE 2)
FOR THE THREE MONTHS ENDED APRIL 29, 1995
(UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
Net assets in liquidation at January 28, 1995 $ 836,470
Investment Income 164
Corporate overhead (1,888)
Unrealized loss on Toys "R" Us, Inc. common stock (214,234)
Loss before income tax credit (215,958)
Income tax credit 85,693
Net loss for the period (130,265)
Distribution of 26,173,718 shares of Toys "R"
Us, Inc. common stock, net of taxes (394,409)
Decrease in net assets (524,674)
Net assets in liquidation at April 29, 1995 $ 311,796
Net loss per share $(2.49)
Weighted average number of shares 52,352
See accompanying notes.
PETRIE STORES CORPORATION
CONSOLIDATED STATEMENT OF OPERATIONS (NOTES 2 AND 3)
FOR THE THREE MONTHS ENDED APRIL 30, 1994*
(UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
Interest expense $(2,516)
Loss from continuing operations before income taxes (2,516)
Income tax benefit 1,006
Loss from continuing operations (1,510)
Income from discontinued operations, net of income taxes 2,412
Net income $ 902
(Loss) income per share:
Loss from continuing operations (.03)
Income from discontinued operations .05
Net income $ .02
Weighted average number of shares 46,769
* Restated
See accompanying notes.
PETRIE STORES CORPORATION
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE THREE MONTHS ENDED APRIL 30, 1994
(UNAUDITED)
(IN THOUSANDS)
Cash flows from operating activities
Net income $ 902
Adjustments to reconcile net income to net cash used in
operating activities:
Depreciation and amortization of property and equipment 14,062
Other amortization 772
Deferred income taxes 148
Changes in assets and liabilities:
Decrease (increase) in:
Accounts receivable 3,293
Merchandise inventories (45,064)
Prepaid expenses (4,026)
Other assets (55)
Increase (decrease) in:
Accounts payable 826
Accrued expenses and other liabilities (4,026)
Proceeds from sale of common stock held for
investment - trading securities 16,843
Other long-term liabilities (200)
Net cash used in operating activities (16,525)
Cash flows used in investing activities
Additions to property and equipment (22,678)
Cash flows from financing activities
Net short-term borrowings 30,000
(2,338)
Cash dividends
Net cash provided by financing activities 27,662
Net decrease in cash and cash equivalents (11,541)
Cash and cash equivalents, beginning of period 39,290
Cash and cash equivalents, end of period $ 27,749
Supplemental disclosures of cash flow information
Cash paid during the period for:
Interest $ 30
Income taxes $ 202
See accompanying notes.
PETRIE STORES CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
APRIL 29, 1995
1. INTERIM REPORTING
The accompanying unaudited consolidated financial statements of
Petrie Stores Corporation ("Petrie") have been prepared in accordance
with generally accepted accounting principles for interim financial
information and with the instructions to Form 10-Q and Rule 10-01 of
Regulation S-X. Accordingly, they do not include all of the
information and footnotes required by generally accepted accounting
principles for complete financial statements. In the opinion of
Petrie, all adjustments (consisting of only normal recurring accruals)
considered necessary for a fair presentation have been included.
Operating results for the three months ended April 29, 1995 are not
necessarily indicative of the results that may be expected for the
fiscal year ending February 3, 1996. For further information,
reference is made to the consolidated financial statements and
footnotes thereto included in Petrie's Annual Report on Form 10-K for
the fiscal year ended January 28, 1995.
2. BASIS OF PRESENTATION
For financial statement presentation purposes, a liquidation basis
of accounting was implemented as of January 28, 1995. The application
of a liquidation basis had no effect on Petrie's net assets as of April
29, 1995 and January 28, 1995. The statements of net assets in
liquidation at April 29, 1995 and January 28, 1995 do not distinguish
between current and long-term balances as would be reflected if such
statements had been prepared on a going-concern basis. The
accompanying consolidated statements of operations and cash flows for
the three months ended April 30, 1994 are presented on a going-concern
basis.
In December 1994, as part of the reorganization of Petrie's retail
operations in connection with their sale, all of Petrie's former
subsidiaries with retail operations were transferred to Petrie Retail,
Inc. ("Petrie Retail"), then a wholly-owned subsidiary of Petrie, and
all of the shares of Toys "R" Us, Inc. ("Toys 'R' Us") common stock,
par value $.10 per share ("Toys Common Stock"), held by Petrie's former
subsidiaries were transferred to Petrie. Thereafter, Petrie Retail was
sold to PS Stores Acquisition Corp. (hereafter, including its
subsidiaries and affiliates unless the context requires otherwise, "PS
Stores"). As a result of the reorganization, Petrie has no
subsidiaries.
3. DISCONTINUED OPERATIONS
On December 9, 1994, pursuant to the terms of a Stock Purchase
Agreement, as amended, Petrie completed the sale of the stock of Petrie
Retail. The stock of Petrie Retail was sold to PS Stores for a net
cash purchase price of approximately $177.5 million and the assumption
by PS Stores of various liabilities including, but not limited to, all
of the leases to which Petrie or any of its subsidiaries was a party
(Note 5).
The results of the retail operations are accounted for as
discontinued operations in the accompanying Consolidated Statement of
Operations. Amounts in the Consolidated Statement of Operations and
the notes thereto have been restated to reflect the discontinuance of
the retail operations.
Components of income from discontinued operations for the three months
ended April 30, 1994 are as follows:
Net sales $337,525
Income from discontinued retail operations before
income taxes 4,293
Income taxes (1,881)
Income from discontinued retail operations $ 2,412
4. INVESTMENTS IN COMMON STOCK
Petrie's investments in common stock consist of shares of Toys
Common Stock, which are being carried at market value.
On January 24, 1995, Petrie placed 3,493,450 and 2,724,406 shares
of Toys Common Stock into an escrow account and a collateral account,
respectively. The shares of Toys Common Stock were placed into these
accounts to secure the payment of Petrie's contingent liabilities
pursuant to the terms of an Acquisition Agreement with Toys "R" Us, the
Stock Purchase Agreement and other agreements with Toys "R" Us and/or
PS Stores. Petrie has agreed to maintain a value in the collateral
account of at least $74,250,000 until a hedge or similar arrangement
that protects the value of the Toys Common Stock in the collateral
account is in place. Due to fluctuations in the market price of Toys
Common Stock, on March 3, 1995, March 10, 1995 and March 14, 1995,
Petrie deposited 275,594, 100,000 and 100,000 additional shares of Toys
Common Stock, respectively, in the collateral account. As of June 9,
1995, the number of shares of Toys Common Stock in the collateral
account is 3,200,082 shares. Pursuant to the terms of an Amended and
Restated Cash Collateral Agreement between Petrie and PS Stores, PS
Stores can request the collateral agent to sell the Toys Common Stock
in the collateral account if a hedge or similar arrangement that
protects the value of the Toys Common Stock in the collateral account
is not implemented by June 30, 1995. In addition, Petrie has agreed
with Toys "R" Us pursuant to a letter agreement, dated as of January
24, 1995, that until such time as a hedge or similar arrangement is in
place, Petrie will retain, either individually or in combination, (i)
cash in an amount of at least $177.5 million (the "Reserved Amount") or
(ii) shares of Toys Common Stock having a market value (as of January
20, 1995) of at least twice the Reserved Amount, to secure the payment
of Petrie's contingent liabilities (Note 5). Accordingly, as of June
9, 1995, based on the approximately $21.3 million in cash held by
Petrie, Petrie was required to retain at least 10,913,538 shares of
Toys Common Stock (including the 3,493,450 shares of Toys Common Stock
held in the escrow account and the 3,200,082 shares of Toys Common
Stock held in the collateral account).
As approved by Petrie's shareholders on January 24, 1995, Petrie
will be liquidated and dissolved and the shares of Toys Common Stock
held by Petrie will be distributed to its shareholders. In this
regard, on March 24, 1995, 26,173,718 shares of Toys Common Stock
(market value of approximately $644.5 million) held by Petrie were
distributed to Petrie's shareholders. Immediately following the
distribution, Petrie held 15,902,702 shares of Toys Common Stock.
Petrie's deferred tax liability was reduced by approximately $250.1
million as a result of the March 24, 1995 distribution. As future
distributions are made, the deferred tax liability will be further
reduced.
On May 26, 1995, Petrie sold 610,700 shares of Toys Common Stock
in open market transactions to raise cash (approximately $15.0 million)
to provide for certain of its contingent liabilities, if and when such
liabilities become due (Note 5). Following such sale, Petrie holds
15,292,002 shares of Toys Common Stock.
During the second half of Petrie's fiscal year ending February 3,
1996, but not later than January 24, 1996, Petrie will place its then
remaining shares of Toys Common Stock in a liquidating trust
established to provide for Petrie's contingent liabilities (Note 5).
Petrie's shareholders will receive pro rata interests in the
liquidating trust. Prior to making further distributions of shares of
Toys Common Stock to shareholders of Petrie or establishing the
liquidating trust, Petrie is considering entering into a hedge or other
similar arrangement that protects the value of the shares of Toys
Common Stock required to be retained to provide, if necessary, for the
payment of Petrie's contingent liabilities.
5. COMMITMENTS AND CONTINGENCIES
Petrie is a guarantor of certain retail store leases to which
former subsidiaries of Petrie are parties. The leases expire at
various times through 2005. Since December 1994, Petrie has not been
required to, and is not currently aware of any existing conditions
which would cause Petrie to have to, make any payments with respect to
the underlying leases as a result of any defaults by the lessees
thereunder. As of June 9, 1995, Petrie believes that its aggregate
contingent lease guarantee liability, should there be a default with
respect to the underlying leases, is approximately $95.2 million.
Petrie is continuing to seek to negotiate further reductions in its
contingent liability related to these lease guarantees.
Effective January 31, 1995, PS Stores withdrew from the United
Auto Workers District 65 Security Plan Pension Fund (the "Multiemployer
Plan"). Due to the underfunding of the Multiemployer Plan, PS Stores
has incurred withdrawal liability pursuant to the Employee Retirement
Income Security Act of 1974, as amended. Based upon preliminary
discussions with the administrators and trustees of the Multiemployer
Plan, Petrie believes that the withdrawal liability allocated to PS
Stores, as a result of its withdrawal, will be approximately $12
million, with an additional liability allocated to PS Stores of
approximately $3 million in excise taxes for the Multiemployer Plan's
failure to meet certain Internal Revenue Code minimum funding
standards. In the event of a mass withdrawal by contributing employers
from the Multiemployer Plan, the withdrawal liability allocated to PS
Stores may be higher. Pursuant to the Stock Purchase Agreement between
Petrie and PS Stores, PS Stores is responsible for the first $10
million in withdrawal and related liabilities, with the next $50
million of such liabilities allocated 75 percent to Petrie and 25
percent to PS Stores.
Petrie is being audited by the IRS for its 1989 fiscal year. The
IRS has raised an issue regarding the manner in which Petrie computed
the basis of the Toys Common Stock transferred pursuant to the exchange
of certain of its exchangeable subordinated debentures. Petrie is
actively engaged in discussions with the IRS concerning this matter.
Final resolution of this matter is several months away. After an
extensive review of its records, Petrie continues to believe that any
additional taxes (including interest) resulting from the ultimate
resolution of this matter will not have a material adverse effect on
Petrie's financial position.
Petrie believes that adequate accruals have been established in
the accompanying financial statements to provide for any losses that
may be incurred with respect to the aforementioned contingencies.
Petrie, its directors and certain former members of its senior
management are defendants in a consolidated class action brought on
behalf of Petrie's shareholders. The plaintiffs in the action have
alleged (i) that Petrie's directors violated their fiduciary duties of
loyalty and fair dealing by exclusively negotiating with PS Stores for
the sale of the retail operations, (ii) that Petrie's directors failed
to adequately explore third-party interest and thus did not maximize
shareholder value and (iii) that PS Stores was in possession of non-
public information that allowed it to purchase the retail operations at
an inadequate price. The plaintiffs seek, among other things, (i) to
rescind the sale of the retail operations, (ii) a declaratory judgment
that the individual defendants breached their fiduciary duties and/or
(iii) to recover unspecified damages. Petrie continues to believe that
the claims asserted in such complaints are without merit and not
probable of resulting in a material adverse effect on Petrie's
financial position. Petrie plans to contest this suit vigorously.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
The following discussion should be read in conjunction with
the Consolidated Financial Statements provided herein.
RESULTS OF OPERATIONS
As previously disclosed, Petrie Stores Corporation
("Petrie") sold its retail operations on December 9, 1994 (the
"Sale"). On January 24, 1995, Petrie's shareholders approved a
Plan of Liquidation and Dissolution, and Petrie commenced its
liquidation shortly thereafter. As a result, effective January
28, 1995, Petrie has changed its basis of accounting from a
going-concern basis to a liquidation basis. Since January 24,
1995, Petrie's activities have been limited to winding up its
affairs in furtherance of Petrie's Plan of Liquidation and
Dissolution.
The results of the retail operations provided herein for the
three month period ended April 30, 1994 have been restated so
that they may be presented as discontinued operations in Petrie's
Consolidated Statement of Operations. The net loss for the three
month period ended April 29, 1995 was $130,265,000 as compared to
a loss from continuing operations for the three month period
ended April 30, 1994 of $1,510,000. The market price per share
of Toys "R" Us, Inc. ("Toys 'R' Us") common stock, par value $.10
per share ("Toys Common Stock") declined from $30 per share at
January 28, 1995 to $24 5/8 per share at March 24, 1995 (the date
26,173,718 shares of Toys Common Stock were distributed to
Petrie's shareholders) and was $25 3/8 at April 29, 1995. In
applying a liquidation basis of accounting, Petrie has given
effect to the decline in the market price of Toys Common Stock in
its results of operations and has recorded an unrealized loss on
the Toys Common Stock of $214,234,000. As a result of this
unrealized loss, Petrie reduced its deferred tax liability by
$85,693,000. Prior to adopting a liquidation basis of
accounting, unrealized gains/losses on the Toys Common Stock, net
of related deferred taxes, resulted in adjustments to
shareholders' equity.
Corporate overhead of $1,888,000 for the three months ended
April 29, 1995 consists primarily of the costs and expenses
related to the liquidation and dissolution of Petrie including,
but not limited to, legal fees, insurance, accounting fees, salaries,
real estate advisory fees, transfer agent fees, exchange listing
fees and printing and shareholder communications expenses. Included
in corporate overhead for the three months ended April 29, 1995
is $618,000 related to premiums for directors' and officers'
liability insurance. In connection with Petrie's liquidation
basis of accounting, these premiums were expensed upon payment.
Although certain overhead costs and expenses were also incurred
by Petrie during the three months ended April 30, 1994 in
connection with its public reporting requirements, corporate
overhead has been included in discontinued operations for such
period. In the opinion of management, corporate overhead was
not material to either continuing or discontinued operations for
the three months ended April 30, 1994.
During the three months ended April 29, 1995, Petrie earned
$164,000 in investment income. Investment income for the three
months ended April 30, 1994 related to the retail operations and
is included in discontinued operations.
Petrie's 8% Convertible Subordinated Debentures due December
31, 2010 were fully redeemed or converted in the fiscal year
ended January 28, 1995. As a result, no interest expense was
incurred by Petrie for the three months ended April 30, 1995.
LIQUIDITY AND CAPITAL RESOURCES
On January 24, 1995, Petrie exchanged (the "Exchange") with
Toys "R" Us 39,853,403 shares of Toys Common Stock, held by
Petrie, plus $165 million in cash derived from the Sale, for
42,076,420 shares of Toys Common Stock.
Simultaneously with the closing of the Exchange, Petrie
delivered 3,493,450 shares of the Toys Common Stock that it
received in the Exchange into an escrow account (the "Escrow
Account") pursuant to the terms of an Escrow Agreement, dated as
of January 24, 1995, between Petrie and Custodial Trust Company,
as Escrow Agent (the "Escrow Agreement"). The shares of Toys
Common Stock placed into the Escrow Account pursuant to the
Escrow Agreement secure the payment of certain of Petrie's
obligations to Toys "R" Us arising (i) under (x) the Acquisition
Agreement dated as of April 20, 1994 and amended as of May 10,
1994 between Petrie and Toys "R" Us, (y) the Seller
Indemnification Agreement, dated as of December 9, 1994, among
Petrie, Toys "R" Us, Petrie Retail, Inc. ("Petrie Retail"), PS
Stores Acquisition Corp. ("PS Stores"), and certain subsidiaries
of PS Stores (the "Seller Indemnification Agreement") and (z) the
Stock Purchase Agreement, dated as of August 23, 1994 and amended
as of November 3, 1994, between Petrie and WP Investors, Inc.
(the "Retail Operations Stock Purchase Agreement") and (ii)
otherwise.
In addition, on January 24, 1995, Petrie delivered 2,724,406
shares of the Toys Common Stock that it received in the Exchange
into a collateral account (the "Collateral Account") pursuant to
the terms of an Amended and Restated Cash Collateral and Pledge
Agreement, dated as of December 9, 1994 and amended as of January
24, 1995, among Petrie, PS Stores, certain subsidiaries of PS
Stores, and Custodial Trust Company, as Collateral Agent (the
"Amended and Restated Cash Collateral Agreement"). The shares of
Toys Common Stock placed in the Collateral Account pursuant to
the Amended and Restated Cash Collateral Agreement secure the
payment of certain of Petrie's obligations to PS Stores arising
under (i) the Retail Operations Stock Purchase Agreement and (ii)
the Cross-Indemnification and Procedure Agreement, dated as of
December 9, 1994, between Petrie and PS Stores (the "Cross-
Indemnification and Procedure Agreement"). These obligations
relate primarily to the fiscal year 1989 tax audit (the "Tax
Audit") and the United Auto Workers District 65 Security Plan
Pension Fund (the "Multiemployer Plan"). Pursuant to the Amended
and Restated Cash Collateral Agreement, until the implementation
of a hedge or similar arrangement that protects the value of the
Toys Common Stock in the Collateral Account, Petrie has agreed to
maintain a value in the Collateral Account of at least
$74,250,000. Due to fluctuations in the market price of Toys
Common Stock, on March 3, 1995, March 10, 1995 and March 14,
1995, Petrie deposited 275,594, 100,000 and 100,000 additional
shares of Toys Common Stock, respectively, into the Collateral
Account. As of June 9, 1995, the number of shares of Toys Common
Stock in the Collateral Account is 3,200,082 shares. The Amended
and Restated Cash Collateral Agreement provides that PS Stores
can request the Collateral Agent to sell the Toys Common Stock in
the Collateral Account if the value of the Toys Common Stock in
the Collateral Account is not protected, as of June 30, 1995, by
a hedge or similar arrangement.
Petrie has agreed with Toys "R" Us pursuant to a letter
agreement, dated as of January 24, 1995 (the "Side Letter
Agreement"), that, until such time as a hedge or similar
arrangement that protects the value of the Toys Common Stock is
in place, Petrie will maintain a reserve (the "Reserve") against
certain contingent liabilities (the "Liabilities"), including,
but not limited to (i) guarantees by Petrie of certain retail
store leases to which Petrie's former subsidiaries are parties
and which expire at various times through 2005 (the "Lease
Guarantees"), (ii) liabilities in connection with Petrie's past
participation in the Multi-employer Plan, (iii) assessments made
by or settlements negotiated with the IRS relating to the Tax
Audit and (iv) liabilities in connection with the administration
of Petrie and the Liquidating Trust. Petrie is required to fund
the Reserve with, individually or in combination, (i) cash in an
amount of at least $177.5 million (the "Reserved Amount") or (ii)
shares of Toys Common Stock having a market value (as of January
20, 1995) of at least twice the Reserved Amount. Accordingly, as
of June 9, 1995, based on the approximately $21.3 million in cash
held by Petrie, the Reserve contained 10,913,538 shares of Toys
Common Stock (including the 3,493,450 shares of Toys Common Stock
held in the Escrow Account and the 3,200,082 shares of Toys
Common Stock held in the Collateral Account). In the event that
Petrie desires to make a distribution from the Reserve other than
for the Liabilities, Petrie must notify Toys "R" Us of its intent
to make such a distribution and give Toys "R" Us twenty days
within which to object.
On March 24, 1995, Petrie made an initial liquidating
distribution (the "Distribution") to its shareholders of an
aggregate of 26,173,718 shares of Toys Common Stock, or 62.2% of
the Toys Common Stock held by Petrie, pursuant to Petrie's Plan
of Liquidation and Dissolution. In the Distribution, Petrie
shareholders received 0.5 of a share of Toys Common Stock for
every share of Petrie Common Stock held of record at the close of
business on March 16, 1995. Immediately following the
Distribution, Petrie held 15,902,702 shares of Toys Common Stock.
On May 26, 1995, Petrie sold 610,700 shares of Toys Common
Stock in open market transactions to raise cash (approximately
$15.0 million) to provide for certain of its contingent
liabilities, if and when such liabilities become due. Following
such sale, Petrie holds 15,292,002 shares of Toys Common Stock,
which, as of the close of business on June 9, 1995, had an
aggregate market value of approximately $418.6 million.
Petrie expects to make another distribution of Toys Common
Stock sometime later this year as the Liabilities are reduced.
The size of the next distribution has not yet been determined and
will depend upon the extent to which the Liabilities have been
reduced and the number of shares of Toys Common Stock then
required to be retained to provide, if necessary, for the payment
of the Liabilities. As of June 9, 1995, the closing price per
share of Toys Common Stock as reported on the New York Stock
Exchange Composite Tape was $27 3/8 per share, and during the fifty-
two weeks prior to the date of this report, the price per share
of Toys Common Stock has fluctuated from a high of $39 to a low
of $23 3/4. No assurance can be given as to the future market
prices of Toys Common Stock or as to the extent to which Petrie
will be successful in reducing the Liabilities. However, as
noted above, prior to the next distribution, and in accordance
with the Amended and Restated Cash Collateral Agreement and the
Side Letter Agreement, Petrie is considering entering into a
hedge or similar arrangement that protects the value of its
remaining shares of Toys Common Stock in light of its remaining
Liabilities. No assurance can be given as to the effect that a
hedge or similar arrangement would have on the value of the Toys
Common Stock available for distribution to Petrie shareholders.
Sometime during the second half of Petrie's fiscal year
ending February 3, 1996, but not later than January 24, 1996,
Petrie will place its then remaining shares of Toys Common Stock
and any other assets in the Liquidating Trust, and Petrie's
shareholders will become holders of beneficial interests in the
Liquidating Trust. Additional distributions of the shares of
Toys Common Stock held by Petrie will be made from time to time
to holders of beneficial interests in the Liquidating Trust to
the extent that such shares are not needed to satisfy the
Liabilities.
As noted above, the Liabilities consist primarily of
contingent liabilities related to the Lease Guarantees, the Tax
Audit and the Multiemployer Plan. As of June 9, 1995, Petrie
believes that the aggregate contingent liability related to the
Lease Guarantees, should the lessees thereunder fail to perform
on the underlying lease obligations, is approximately $95.2
million. Petrie is continuing to seek to negotiate further
reductions in its contingent liability related to the Lease
Guarantees. Since the sale of the retail operations on December
9, 1994, Petrie has not been required to, and is not currently
aware of any existing conditions which would cause it to have to,
make any payments with respect to the underlying lease
obligations as a result of any defaults by the lessees
thereunder. As of June 9, 1995, Petrie does not believe that the
amounts that may be payable by it in connection with the Tax
Audit or the Multiemployer Plan would have a material adverse
effect on Petrie's financial position.
As of June 9, 1995, Petrie has approximately $21.3 million
in cash (and cash equivalents), including the approximately $15.0
million in cash received by Petrie in connection with the sale of
610,700 shares of Toys Common Stock on May 26, 1995. Petrie
believes that its cash will be adequate to fund the costs and
expenses related to its liquidation and those of administering
the Liquidating Trust. Such costs and expenses include legal fees,
insurance, accounting fees, salaries, real estate advisory fees,
transfer agent fees, trustee fees, exchange listing fees, Securities
and Exchange Commission filing fees, and printing and shareholder
communications expenses. To the extent that there is cash
remaining upon the termination of the Liquidating Trust, such
cash will be distributed to the Liquidating Trust's beneficial
owners.
PART II - OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) LIST OF EXHIBITS
Exhibit 27 - Financial Data Schedule
(b) REPORTS ON FORM 8-K
(1) Current Report on Form 8-K, dated as of
February 1, 1995, reporting the consummation
of the Exchange.
(2) Current Report on Form 8-K, dated as of
March 28, 1995, reporting the Distribution.
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.
Dated: June 12, 1995 PETRIE STORES CORPORATION
By /s/ HILDA KIRSCHBAUM GERSTEIN
________________________________
Hilda Kirschbaum Gerstein
President and Chief Executive
Officer
Dated: June 12, 1995 By /s/ H. BARTLETT BROWN
_________________________________
H. Bartlett Brown
Treasurer, Principal Financial
Officer and Principal Accounting
Officer
EXHIBIT INDEX
Exhibit No. Document
27 Financial Data Schedule
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
EXHIBIT 27
PETRIE STORES CORPORATION
FINANCIAL DATA SCHEDULE
This schedule contains summary financial information extracted
from Petrie's statement of net assets in liquidation at April 29,
1995 and Petrie's statement of changes in net assets in
liquidation for the three months ended April 29, 1995, and is
qualified in its entirety by reference to such financial
statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-mos
<FISCAL-YEAR-END> FEB-3-1996
<PERIOD-END> APR-29-1995
<CASH> 8,415
<SECURITIES> 403,531
<RECEIVABLES> 0
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 411,946
<CURRENT-LIABILITIES> 7,780
<BONDS> 0
<COMMON> 0
0
0
<OTHER-SE> 311,796
<TOTAL-LIABILITY-AND-EQUITY> 411,946
<SALES> 0
<TOTAL-REVENUES> 0
<CGS> 0
<TOTAL-COSTS> 1,888
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (215,958)
<INCOME-TAX> 85,693
<INCOME-CONTINUING> (130,265)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (130,265)
<EPS-PRIMARY> (2.49)
<EPS-DILUTED> (2.49)
</TABLE>
