<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(MARK ONE)
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED APRIL 30, 1994
--------------
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM __________ TO __________
COMMISSION FILE NUMBER 0-14681
J. BAKER, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
MASSACHUSETTS 04-2866591
(STATE OF INCORPORATION) (I.R.S. EMPLOYER IDENTIFICATION NUMBER)
555 TURNPIKE STREET, CANTON, MASSACHUSETTS 02021
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
(617) 828-9300
(REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)
The registrant (1) has filed all reports to be filed by Section 13 or 15(d) of
the Securities Exchange Act of 1934 during the preceding 12 months (or for such
period that the registrant was required to file such reports), and (2) has been
subject to filing such reports for the past 90 days.
YES X NO _____
-----
The number of shares outstanding of the registrant's common stock as of April
30, 1994 was 13,833,147.
1
<PAGE> 2
<TABLE>
J. BAKER, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
APRIL 30, 1994 (UNAUDITED) AND JANUARY 29, 1994
<CAPTION>
April 30, January 29,
ASSETS 1994 1994
------ ---------- -----------
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 5,271,258 $ 3,584,032
Accounts receivable 37,488,424 31,903,690
Merchandise inventories 314,195,186 278,220,413
Prepaid expenses 6,195,833 6,672,008
Deferred income taxes 1,664,475 1,664,475
----------- -----------
Total current assets 364,815,176 322,044,618
Property, plant and equipment, at cost:
Land and buildings 24,209,721 24,114,820
Furniture, fixtures, machinery and equipment 95,223,911 87,993,608
Leasehold improvements 36,764,088 32,715,145
----------- -----------
156,197,720 144,823,573
Less accumulated depreciation 42,828,615 39,256,180
----------- -----------
Net property, plant and equipment 113,369,105 105,567,393
Deferred income taxes 1,210,000 1,210,000
Other assets 72,548,456 73,674,470
------------ ------------
$551,942,737 $502,496,481
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
Current liabilities:
Current portion of long-term debt $ 2,636,300 $ 2,636,300
Accounts payable 102,643,700 108,262,923
Accrued expenses 22,285,557 24,050,766
Income taxes payable 1,272,504 -
------------ ------------
Total current liabilities 128,838,061 134,949,989
----------- -----------
Other liabilities 12,674,362 12,794,652
Long-term debt, net of current portion 129,300,000 77,000,000
Senior subordinated debt 7,325,483 7,312,366
Convertible subordinated debt 70,353,000 70,353,000
Stockholders' equity 203,451,831 200,086,474
----------- -----------
$551,942,737 $502,496,481
============ ============
</TABLE>
See accompanying notes to consolidated financial statements.
2
<PAGE> 3
<TABLE>
J. BAKER, INC. AND SUBSIDIARIES
STATEMENTS OF CONSOLIDATED EARNINGS
FOR THE QUARTERS ENDED APRIL 30, 1994 AND MAY 1, 1993
(UNAUDITED)
<CAPTION>
Quarter Quarter
Ended Ended
April 30, 1994 May 1, 1993
-------------- -----------
<S> <C> <C>
Sales $221,338,460 $193,387,158
Cost of sales 124,119,268 105,622,419
------------ ------------
Gross profit 97,219,192 87,764,739
Selling, administrative and general expenses 84,550,572 76,821,666
Depreciation and amortization 5,469,817 5,177,645
------------ ------------
Operating income 7,198,803 5,765,428
Net interest expense 2,203,018 1,823,629
------------ ------------
Earnings before income taxes 4,995,785 3,941,799
Taxes on earnings 1,798,000 1,459,000
------------ ------------
Net earnings $ 3,197,785 $ 2,482,799
============ ============
Net earnings per common share:
Primary $ 0.23 $ 0.18
============== ==============
Fully diluted $ 0.22 $ 0.18
============== ==============
Number of shares used to compute net
earnings per share:
Primary 13,813,399 13,538,023
========== ===========
Fully diluted 18,467,411 18,225,684
========== ===========
Dividends declared per share $ 0.015 $ 0.015
============== ==============
</TABLE>
See accompanying notes to consolidated financial statements.
3
<PAGE> 4
<TABLE>
J. BAKER, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE QUARTERS ENDED APRIL 30, 1994 AND MAY 1, 1993
(UNAUDITED)
<CAPTION>
April 30, 1994 May 1, 1993
-------------- -----------
<S> <C> <C>
Cash flows from operating activities:
Net earnings $ 3,197,785 $ 2,482,799
Adjustments to reconcile net earnings to net cash
used in operating activities:
Depreciation and amortization:
Fixed assets 3,572,435 3,362,680
Deferred charges, intangible assets and
deferred financing costs 1,910,499 1,826,599
Change in:
Accounts receivable (6,277,665) (7,235,119)
Merchandise inventories (35,974,773) (40,999,313)
Prepaid expenses 476,175 (1,269,823)
Accounts payable (5,619,223) 14,782,902
Accrued expenses (1,765,209) (2,588,959)
Income taxes payable 1,965,435 734,296
Other liabilities (90,374) (2,481,895)
----------- -----------
Net cash used in operating
activities (38,604,915) (31,385,833)
----------- -----------
Cash flows from investing activities:
Capital expenditures for:
Property, plant and equipment (11,374,147) (5,023,426)
Other assets (801,284) (1,207,791)
----------- -----------
Net cash used in investing activities (12,175,431) (6,231,217)
----------- -----------
Cash flows from financing activities:
Proceeds from long-term debt 52,300,000 31,024,400
Proceeds from issuance of common stock 375,012 2,339,457
Payment of dividends (207,440) (204,040)
----------- ------------
Net cash provided by financing activities 52,467,572 33,159,817
----------- ------------
Net increase (decrease) in cash 1,687,226 (4,457,233)
Cash and cash equivalents at beginning of year 3,584,032 6,385,467
----------- -----------
Cash and cash equivalents at end of period $ 5,271,258 $ 1,928,234
=========== ===========
Supplemental disclosure of cash flow information:
Cash paid for interest $ 681,597 $ 729,708
============ ===========
Cash paid for income taxes, net $ 1,978,090 $ 723,704
============ ===========
Non-cash financing activity:
Conversion of subordinated debt $ - $ 2,584,000
============ ===========
</TABLE>
See accompanying notes to consolidated financial statements
4
<PAGE> 5
J. BAKER, INC. AND SUBSIDIARIES
NOTES
-----
1] The accompanying unaudited consolidated financial statements, in
the opinion of management, include all adjustments (which consist only of
recurring accruals) necessary for a fair presentation of the Company's
financial position and results of operations. The results for the interim
periods are not necessarily indicative of results that may be expected for the
entire fiscal year.
2] Primary earnings per share is based on the weighted average number of
shares of Common Stock outstanding during such period. Stock options and
warrants are excluded from the calculation since they have less than a 3%
dilutive effect.
Fully diluted earnings per share is based on the weighted average
number of shares of Common Stock outstanding during such period. Included
in this calculation is the dilutive effect of Common Stock issuable under
the 7% convertible subordinated notes due 2002, stock options and warrants.
3] On November 19, 1993, the Company acquired 83% of the outstanding
common stock and all of the outstanding preferred stock of Tishkoff
Enterprises, Inc. of Columbus, Ohio ("TEI"), an operator of full-service,
semi-service and self-service licensed shoe departments in department stores,
specialty stores and discount stores. The 83% interest in the outstanding
common stock was acquired from certain TEI stockholders in exchange for 68,197
shares of the Company's common stock (16,769 of which shares are being withheld
from TEI stockholders for up to two years and are available as a set-off to
satisfy any claims of the Company for indemnification that may arise) and the
right to receive payments equal in the aggregate to 8.3% of the consolidated
pre-tax earnings of TEI over a six year period commencing January 29, 1994,
with a maximum aggregate payment of $4,980,000. The acquisition of all of the
outstanding preferred stock of TEI was made for a payment of $650,000 in cash.
On December 13, 1993, the stockholders of TEI approved the merger of JBAK
Acquisition Corp., an Ohio corporation and a wholly owned subsidiary of the
Company, with and into TEI (the "Merger") and TEI became a wholly owned
subsidiary of the Company. In connection with the Merger, the Company paid
cash consideration to the remaining TEI stockholders in the amount of $442,000,
in payment for the remaining 17% interest in TEI common stock. Subsequent to
the Merger, the corporate name of TEI was changed to Shoe Corporation of
America, Inc. ("SCOA").
4] On January 30, 1993, Morse Acquisition, Inc., a wholly-owned subsidiary
of the Company ("Acquisition"), merged with and into Morse Shoe, Inc. ("Morse")
pursuant to an Amended and Restated Agreement and Plan of Reorganization
dated as of October 22, 1992 (the "Merger Agreement") by and among the Company,
Acquisition and Morse, whereby Morse became a wholly-owned subsidiary of the
Company. Pursuant to the acquisition of Morse, each share of Morse common
stock was exchanged for .17091 of a share of J. Baker common stock. In
connection with the acquisition, approximately 2,767,377 shares of J. Baker
common stock were issuable to Morse stockholders, including holders of
approximately $47 million, or 94%, of Morse convertible debentures which had
been converted into Morse common stock prior to January 30, 1993. During the
year ended January 29, 1994, holders of an additional $2.7 million of Morse
convertible debentures converted their debt into 49,820 shares of J. Baker
common stock. Approximately 6,500 additional shares of J. Baker common stock
are reserved for future issuance upon conversions of the remaining outstanding
Morse convertible debentures.
5] On July 8, 1993, July 19, 1993 and September 6, 1993 Fishers Big Wheel,
Inc. ("Fishers"), Jamesway Corporation ("Jamesway") and Rose's Stores, Inc.
("Rose's), respectively, licensors of the Company, filed for protection under
Chapter 11 of the Bankruptcy Code. At the time of the bankruptcy filings,
the Company had outstanding accounts receivable of $6.0 million in the
aggregate due from Fishers, Jamesway and Rose's. At April 30, 1994, carried on
the balance sheet in Other Assets are deferred lease acquisition costs of $2.9
million attributable to the Rose's license agreement. The Company intends to
continue to amortize the deferred lease acquisition costs of the Rose's license
agreement through the license termination date of July 30, 1997, since the
Company believes, based on its assessment of the likelihood and level of
ongoing business with Rose's, that the value of the license agreement supports
the historical carrying cost at April 30, 1994. During the first half of
fiscal 1995, Jamesway and Rose's will close approximately 113 stores. On
January 5, 1994, Fishers received bankruptcy court approval to conduct
liquidation sales in all 54 of its stores. At the completion of the
liquidation sales in the first quarter of fiscal 1995, Fishers ceased business
operations. The Company does not expect these filings under the Bankruptcy
Code, or the aforementioned store closings, to have a material adverse effect
on future earnings. Combined sales in Jamesway and Rose's totaled $15.8
million for the quarter ended April 30, 1994. Sales in Fishers for the quarter
ended April 30, 1994 were $1.6 million.
5
<PAGE> 6
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.
All references herein to fiscal 1995 and fiscal 1994 relate to the
years ending January 28, 1995 and January 29, 1994, respectively.
Results of Operations
FIRST QUARTER FISCAL 1995 VERSUS FIRST QUARTER FISCAL 1994
Net sales increased by $28.0 million to $221.3 million in the first
quarter of fiscal 1995 from $193.4 million in the first quarter of fiscal
1994. Sales in the Company's footwear operations increased by $18.0 million
primarily as a result of sales in the newly-acquired SCOA licensed shoe
division coupled with an increase of $3.2 million in wholesale footwear sales.
The sales increase in footwear operations was partially offset by a 2.9%
decrease in comparable store sales. (Comparable retail footwear sales
increases/decreases are based upon comparisons of weekly sales volume in
licensed departments and Parade of Shoes and Fayva shoe stores which were open
in corresponding weeks of the two comparison periods.) Sales in the company's
specialty apparel operations increased by $10.0 million due to an increase in
the number of Casual Male Big & Tall stores and Work 'n Gear stores in
operation during the first quarter of fiscal 1995 over the first quarter of
fiscal 1994, coupled with an 11.8% increase in comparable apparel store sales.
(Comparable specialty apparel store sales increases/ decreases are based upon
comparisons of weekly sales volume in Casual Male Big & Tall stores and Work 'n
Gear stores which were open in corresponding weeks of the two comparison
periods.)
Cost of sales constituted 56.1% of sales in the first quarter of fiscal
1995 as compared to 54.6% of sales in the first quarter of fiscal 1994.
This increase was due to an increase in markdowns as a percentage of sales
coupled with a lower initial markup on merchandise purchases and an increase
in wholesale sales, which have a higher cost of sales than retail sales.
Cost of sales in the company's footwear operations was 57.1% of sales in
the first quarter of fiscal 1995 as compared to 55.2% of sales in the first
quarter of fiscal 1994 primarily due to an increase in markdowns as a
percentage of sales (which increase was primarily attributable to the closing
of 117 licensed departments during the quarter and the liquidation of those
departments' inventory), a lower initial markup on merchandise purchases and an
increase in wholesale sales. Cost of sales in the specialty apparel operations
was 52.0% of sales the first quarter of fiscal 1995 as compared to 52.1% of
sales in the first quarter of fiscal 1994 due to a higher initial markup on
merchandise purchases partially offset by an increase in markdowns as a
percentage of sales.
Selling, administrative and general expenses increased $7.7 million or
10.1% in the first quarter of fiscal 1995 as compared to the first quarter
of fiscal 1994 primarily due to the SCOA acquisition, coupled with an
increase in the number of specialty apparel stores. As a percentage of sales,
selling, administrative and general expenses were 38.2% in the first quarter of
fiscal 1995 as compared to 39.7% in the first quarter of fiscal 1994 primarily
due to lower fixed overhead costs as a percentage of sales. Selling,
administrative and general expenses in the company's footwear operations were
37.1% of sales in the first quarter of fiscal 1995 as compared to 38.7% of
sales in the first quarter of fiscal 1994 as result of a decrease in the number
of Fayva stores, coupled with a relative increase in wholesale footwear sales
and lower corporate overhead expenses as a percentage of sales. Selling,
administrative and general expenses in the company's specialty apparel
operations were 42.5% of sales in the first quarter of fiscal 1995 as compared
to 44.7% in the first quarter of fiscal 1994 primarily due to a comparable
store sales increase in apparel operations, which caused fixed selling,
administrative and general expenses to be a lower percentage of sales than in
the prior period.
Depreciation and amortization expense increased by $292,000 in the first
quarter of fiscal 1995 as compared to the first quarter of fiscal 1994 due to
an increase in depreciable and amortizable assets.
As a result of the above described effects, the company's operating income
increased by 24.9% to $7.2 million in the first quarter of fiscal 1995 from
$5.8 million in the first quarter of fiscal 1994. As a percentage of sales,
operating income was 3.3% in the first quarter of fiscal 1995 as compared to
3.0% in the first quarter of fiscal 1994.
Net interest expense increased $379,000 to $2.2 million in the first
quarter of fiscal 1995 from $1.8 million in the first quarter of fiscal 1994
primarily due to higher levels of borrowings.
6
<PAGE> 7
Taxes on earnings for the first quarter of fiscal 1995 were $1.8
million, yielding an effective tax rate of 36.0%, as compared to taxes of $1.5
million, yielding an effective tax rate of 37.0% in the first quarter of fiscal
1994.
Net earnings for the first quarter of fiscal 1995 were $3.2 million as
compared to earnings of $2.5 million in the first quarter of 1994, an increase
of 28.8%.
Financial Condition
APRIL 30, 1994 VERSUS JANUARY 29, 1994
The increase in accounts receivable at April 30, 1994 from January 29,
1994 is primarily due to seasonal factors, licensed sales in April being higher
than licensed sales in January.
Merchandise inventories at April 30, 1994 were higher than at January
29, 1994 primarily due to a seasonal increase in the average inventory level
per location and an increase in the number of licensed shoe departments in
operation.
The increase in net property, plant and equipment is the result of the
company incurring capital expenditures of approximately $11.4 million in the
first quarter of fiscal 1995 primarily for the opening of new stores and the
renovation of existing units.
The ratio of accounts payable to merchandise inventory was 32.7% at
April 30, 1994 as compared to 38.9% at January 29, 1994. This decrease is
primarily the result of the company's decision to reduce the average financing
terms of its foreign purchases.
Debt increased to $207.0 million at April 30, 1994 from $154.7 million
at January 29, 1994 primarily due to additional borrowings under the company's
revolving line of credit to meet seasonal working capital needs and to fund
capital expenditures.
Liquidity and Capital Resources
As a result of an amendment dated April 29, 1994 increasing the
aggregate commitment amount from $215 million (the "Amendment"), the Company
has a $250 million revolving credit facility on an unsecured basis with Shawmut
Bank, N.A., The First National Bank of Boston, Fleet Bank of Massachusetts,
N.A., Citizens Savings Bank, National Westminster Bank USA, Fuji Bank, Ltd.,
The Yasuda Trust and Banking Company, Ltd. and Standard Chartered Bank (the
"Banks"). Pursuant to the Amendment, the aggregate commitment amount will be
reduced by $10 million on each December 29th of 1994, 1995 and 1996. Borrowings
under the revolving credit facility bear interest at variable rates and, at the
discretion of the Company, can be in the form of loans, bankers' acceptances
and letters of credit. This facility expires in June, 1997. As of April 30,
1994, the Company had outstanding obligations under the revolving credit
facility of $205.2 million, consisting of loans, obligations under bankers'
acceptances and letters of credit.
<TABLE>
Following is a table showing actual and planned store openings by
division for fiscal 1995:
<CAPTION>
Actual Openings Planned Openings Total
First Second - Fourth Actual/Planned
Division Quarter Fiscal 1995 Quarter Fiscal 1995 Openings
-------- ------------------- ------------------- --------
<S> <C> <C> <C>
Licensed/Wholesale 63 219 282
Parade of Shoes 14 31 45
Fayva 2 0 2
Casual Male 14 36 50
Work 'n Gear 2 8 10
</TABLE>
7
<PAGE> 8
The majority of the licensed department openings are in the Company's
SCOA subsidiary, and are primarily a result of the acquisition of licensed shoe
departments previously operated by Wohl Shoe Company ("Wohl"), a subsidiary of
Brown Group Retail, Inc. Wohl had previously announced that it is
discontinuing its licensed footwear operations.
Offsetting the above store openings, the Company has closed 117
licensed/wholesale departments (including aforementioned Jamesway, Rose's and
Fishers licensed departments), and 7 Fayva stores during the first quarter of
fiscal 1995, and has plans to close approximately an additional 208
licensed/wholesale departments (including 149 wholesale footwear departments in
the Caldor chain, to which the Company will cease supplying shoes), 29 Fayva
stores and 8 Parade of Shoes stores during the second through fourth quarters
of fiscal 1995.
The information on store openings and closings reflects management's
current plans and should not be interpreted as an assurance of actual future
developments.
The Company believes that amounts available under its revolving credit
facility, along with internally generated funds, will be sufficient to meet
its operating and capital requirements under ordinary circumstances through the
end of the current fiscal year.
8
<PAGE> 9
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
--------------------------------
(a) The Exhibits in the Exhibit Index are filed as part of this report.
(b) No reports on Form 8-K were filed by the registrant during the quarter
for which this report is filed.
9
<PAGE> 10
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
J. BAKER, INC.
By: /s/ Alan I. Weinstein
----------------------------------
Alan I. Weinstein
Senior Executive Vice President and
Principal Financial Officer
Date: Canton, Massachusetts
June 10, 1994
By: /s/ Philip G. Rosenberg
----------------------------------
Philip G. Rosenberg
First Senior Vice President and Treasurer
(Chief Accounting Officer)
Date: Canton, Massachusetts
June 10, 1994
10
<PAGE> 11
<TABLE>
EXHIBIT INDEX
-------------
<CAPTION>
EXHIBIT PAGE NO.
- - ------- --------
<S> <C>
4. INSTRUMENTS DEFINING THE RIGHTS OF SECURITY HOLDERS, INCLUDING INDENTURES
-------------------------------------------------------------------------
(.01) Second Amendment Agreement by and among JBI, Inc., J. Baker, Inc. and *
Shawmut Bank, N.A. et. al. dated as of April 29, 1994.
11. COMPUTATION OF PRIMARY AND FULLY DILUTED EARNINGS PER SHARE *
-----------------------------------------------------------
<FN>
- - -------------------
* Included herein.
</TABLE>
11
<PAGE> 1
Exhibit 4
SECOND AMENDMENT AGREEMENT
SECOND AMENDMENT AGREEMENT dated as of April 29, 1994, among JBI, INC.,
a Massachusetts corporation (the "Borrower"); J. BAKER, INC., a Massachusetts
corporation ("Baker"); each of the banks that is a signatory hereto
(individually, a "Bank" and, collectively, the "Banks"); and SHAWMUT BANK,
N.A., a national banking association, as agent for the Banks (in such capacity,
together with its successors in such capacity, the "Agent").
The Borrower, Baker, the Banks and the Agent are parties to a Revolving
Credit and Loan Agreement dated as of February 1, 1993 (as amended by the First
Amendment and Waiver Agreement relating thereto dated as of November 19, 1993
(the "FIRST AMENDMENT TO CREDIT AGREEMENT") and in effect on the date hereof,
the "CREDIT AGREEMENT").
The Borrower and Baker have requested that the Credit Agreement be
amended to, among other things, (i) increase the Aggregate Commitment Amount
and extend the Termination Date under the Credit Agreement, (ii) reduce the
Prime Margin, the LIBO Margin and the Commission Rate and (iii) amend certain
covenants thereunder, and the Banks and the Agent have agreed to such
amendments upon the terms and conditions hereof. Accordingly, the parties
hereto hereby agree as follows:
Section 1. DEFINITIONS. Except as otherwise defined in this Agreement,
terms defined in the Credit Agreement are used herein as defined therein.
Section 2. AMENDMENTS. Effective as of May 1, 1994 but subject to the
satisfaction of all of the conditions precedent set forth in Section 4 hereof,
the Credit Agreement and other Operative Documents and Financing Agreements
shall be amended as follows:
A. The fourth Whereas clause of the Credit Agreement is hereby amended
by changing "$215,000,000" to read "$250,000,000".
B. Article I of the Credit Agreement is amended as follows:
(1) The definition of "COMMISSION RATE" is amended by changing "2.5%"
to read "1.5%".
(2) The definition of "LIBO MARGIN" is amended by changing "3%" to
read "1.5%".
(3) The definition of "MAJORITY BANKS" is amended by changing "55%" to
read "70%".
<PAGE> 2
(4) The definition of "PRIME MARGIN" is amended by changing ".5%" to
read "0%".
(5) The definition of "TERMINATION DATE" is amended by changing "June
30, 1996" to read "June 30, 1997".
C. The definition of "AGGREGATE COMMITMENT AMOUNT" is amended by
changing "Two Hundred Fifteen Million Dollars ($215,000,000.00)" to read "Two
Hundred Fifty Million Dollars ($250,000,000.00)."
D. The definition of "COMMITMENT REDUCTION DATE" is amended by
changing "December 29 of each of calendar years 1994 and 1995" to read
"December 30 of each of calendar years 1994, 1995 and 1996".
<TABLE>
E. Section 6.01 of the Credit Agreement is amended to read in its entirety as follows:
"6.01 The COMMITMENT PERCENTAGE of each BANK
shall be:
<CAPTION>
COMMITMENT
BANK PERCENTAGE
---- ----------
<S> <C>
SHAWMUT 30%
FNB 22%
FLEET-MASS 16%
NATWEST 12%
STANDARD CHARTERED 6%
CITIZENS 5%
YASUDA 5%
FUJI 4%
----
TOTAL: 100.0%".
</TABLE>
F. Section 6.02.1 of the Credit Agreement is amended in its entirety to
read as follows:
"6.02.1 So long as the AGGREGATE COMMITMENT
AMOUNT shall be Two Hundred Fifty Million Dollars
($250,000,000.00), the COMMITMENT AMOUNT of each BANK
shall be:
-2-
<PAGE> 3
<TABLE>
<CAPTION>
COMMITMENT
BANK AMOUNT
---- ------
<S> <C>
SHAWMUT $ 75,000,000
FNB 55,000,000
FLEET-MASS 40,000,000
NATWEST 30,000,000
STANDARD CHARTERED 15,000,000
CITIZENS 12,500,000
YASUDA 12,500,000
FUJI 10,000,000
-------------
TOTAL: $250,000,000".
</TABLE>
G. Section 6.03 of the Credit Agreement is amended to read in its
entirety as follows:
<TABLE>
"6.03 The AGGREGATE COMMITMENT AMOUNT shall
automatically be reduced, as of the close of business
Boston time on each COMMITMENT REDUCTION DATE, to the
following respective amounts:
<CAPTION>
COMMITMENT REDUCTION AGGREGATE COMMITMENT
DATE IN: AMOUNT REDUCED TO:
<S> <C>
December, 1994 $240,000,000
December, 1995 $230,000,000
December, 1996 $220,000,000
</TABLE>
The AGGREGATE COMMITMENT AMOUNT shall automatically be reduced to zero
on the TERMINATION DATE."
H. Section 9.01(a) of the Credit Agreement is amended by changing "30
days" to read "45 days".
I. Section 9.03 of the Credit Agreement is amended by deleting
subsection (f) thereof.
J. Section 9.15 of the Credit Agreement is amended to read in its
entirety as follows:
"9.15 Keep in effect at all times one or
more interest rate protection agreements with one or
more BANKS with a maturity of not less than one year
and covering a notional principal amount of not less
than $75,000,000, such agreements to be in form and
substance reasonably satisfactory to the MAJORITY
BANKS."
- 3 -
<PAGE> 4
K. Section 10.01.4(a) of the Credit Agreement is amended by changing
"February 1, 1994" to read "February 1, 1995" and "February 1, 1995" to read
"February 1, 1996".
L. Section 10.01.4(b) of the Credit Agreement is amended to read in
its entirety as follows:
<TABLE>
"(b) Permit LEVERAGE to exceed, on each date specified below, the
percentage set forth opposite the reference to such date:
<CAPTION>
Date Maximum Leverage
---- ----------------
<S> <C>
the last day of
the fiscal quarter
ending on or about
February 1, 1994 115%
the last day of
the fiscal quarter
ending on or about
February 1, 1995 100%
the last day of
the fiscal quarter
ending on or about
February 1, 1996 90%
the last day of
the fiscal quarter
ending on or about
February 1, 1997 85%"
</TABLE>
M. Section 10.01.5(c) of the Credit Agreement is amended to read in its
entirety as follows:
<TABLE>
"(c) The applicable percentages to be used in Section 10.01.5(a)
shall be as follows for each of the following respective periods:
<CAPTION>
Period Minimum Percentage
------ ------------------
<S> <C>
From the CLOSING DATE to
and including the last
day of the FISCAL YEAR
ending on or about
February 1, 1994 120%
</TABLE>
- 4 -
<PAGE> 5
<TABLE>
<S> <C>
From the first day of the
FISCAL YEAR beginning on or
about February 1, 1994 to and
including the last day of
the FISCAL YEAR ending on
or about February 1, 1995 125%
From the first day of the
FISCAL YEAR beginning on or
about February 1, 1995 to and
including the last day of
the FISCAL YEAR ending on
or about February 1, 1996 130%
At all times thereafter 140%"
</TABLE>
N. Section 10.01.6 of the Credit Agreement is amended by changing (x)
"$28,000,000" in clause (i) thereof to read "$40,000,000" and (y) "$20,000,000"
in clause (ii) thereof to read "$35,000,000."
O. Section 10.01.7 of the Credit Agreement is amended by inserting
immediately after "net loss" on the second line thereof the following:
"(other than any non-cash losses arising from the write-offs of
certain licensing premium payments in connection with the closing of
Ames Department Stores)".
P. Section 10.01.8 of the Credit Agreement is amended to read in its
entirety as follows:
"10.01.8 In any one FISCAL YEAR, sell or dispose of any real or
personal property, other than in the ordinary course of business and
other than such sale or disposition as may be approved in writing by
the MAJORITY BANKS, which property has a fair market value in excess of
$1,000,000 on a consolidated basis."
Q. Section 10.01.10(b) of the Credit Agreement is amended to read in
its entirety as follows:
"(b) The applicable percentage to be used in Section 10.01.10(a)
shall be as follows for each of the following respective periods:
- 5 -
<PAGE> 6
<TABLE>
<CAPTION>
Period Minimum Percentage
------ ------------------
<S> <C>
From the CLOSING DATE to
and including January 31,
1994 250%
From February 1, 1994 to and
including January 31, 1995 300%
From February 1, 1995 to and
including January 31, 1996 325%
At all times thereafter 350%"
</TABLE>
R. Section 10.02.2 of the Credit Agreement is amended to read in its
entirety as follows:
"10.02.2 Purchase assets other than in the ordinary course of
business (except, in the case of BAKER, the BORROWER or the
SUBSIDIARIES, such purchases up to an aggregate amount of $1,000,000 and
except such other purchases as may be approved in writing by the
MAJORITY BANKS)."
S. Section 10.05(d)(ii) of the Credit Agreement is amended by changing
"$5,000,000" to read "$15,000,000".
T. Section 10.05(d)(iv) of the Credit Agreement is amended to read in
its entirety as follows:
"(iv) The aggregate of (x) all LETTERS OF CREDIT and STANDBY
L/C'S issued for the account of TCM, WGS and SHOE CORPORATION and (y)
all BANKER'S ACCEPTANCES accepted for the account of TCM, WGS and SHOE
CORPORATION shall not exceed $25,000,000 at any one time outstanding,
and TCM, WGS and SHOE CORPORATION shall be jointly and severally liable
in respect thereof."
U. Section 10.10 is amended by inserting immediately before the period
at the end thereof the following:
"; and provided further that the Borrower or Baker may create or
acquire any SUBSIDIARIES with the prior written approval of the
MAJORITY BANKS".
V. Section 10.12.2 of the Credit Agreement is amended to read in its
entirety as follows:
"10.12.2 (Intentionally omitted.)".
- 6 -
<PAGE> 7
W. Section 19.01 of the Credit Agreement is amended by deleting
"(except that no such approval shall be required in order for SHAWMUT or FNB to
sell participating interests of up to $10,000,000 in the aggregate for each
such BANK or for FNB to sell participating interests to any affiliate
thereof)".
X. Section 21.02 of the Credit Agreement is amended by deleting
"(except that no such approval shall be required in order for SHAWMUT or FNB to
make assignments of up to $10,000,000 in the aggregate for each such BANK)".
Y. Section 26.01 of the Credit Agreement is amended to read in its
entirety as follows:
"26.01 (Intentionally omitted.)".
Z. Exhibit D to the Credit Agreement is amended by changing "June 30,
1996" to read "June 30, 1997".
AA. References in each of the Operative Documents and Financing
Agreements to the Credit Agreement or words of like import (including indirect
references thereto) shall be deemed to be references to the Credit Agreement as
amended hereby.
Section 3. Representations and Warranties; Covenants.
-----------------------------------------
Each of the Borrower and Baker hereby represents and warrants to the
Banks and the Agent that, as of the date hereof, after giving effect to the
amendments contemplated by Section 2 hereof: (a) no Default has occurred and
is continuing, (b) the representations and warranties set forth in Article VIII
of the Credit Agreement are true and complete on the date hereof as if made on
and as of the date hereof and as if each reference in said Article VIII to
"this Agreement" included reference to this Agreement (provided that the
representation and warranty set forth herein shall not be deemed to be
inaccurate solely by reason of the failure of any information contained in any
of Exhibits G (solely as the information therein relates to Section 8.04 or
8.05 of the Credit Agreement), N, O, P, Q and R to the Credit Agreement to
remain true) and (c) the amendments contemplated by Section 2 hereof do not
require any consent under any agreement, instrument or other document
(including without limitation the Convertible Subordinated Notes, the Senior
Subordinated Notes and the Subordinated Convertible Debentures) including
without limitation any consent necessary to cause the Loans and the Revolving
Notes to be Obligations to which the Subordinated Indebtedness shall be
subordinated under the subordination agreement(s) referred to in Section 1.110
of the Credit Agreement (and the foregoing shall be deemed to be
- 7 -
<PAGE> 8
representations and warranties made in an Operative Document for purposes of
Section 11.01(d) of the Credit Agreement).
Section 4. CONDITIONS PRECEDENT. As provided in Sections 2 above, this
Agreement shall become effective as of May 1, 1994 upon the receipt by the
Agent of the following documents, each of which shall be satisfactory to the
Agent in form and substance:
(a) Counterparts of this Agreement duly executed and delivered
by each of the parties hereto;
(b) New Revolving Notes duly executed and delivered by the Borrower
payable to the order of the Banks in the respective amounts
equal to the respective Commitment Amounts of the Banks;
(c) Certified copies of the charter and by-laws (or equivalent
documents) of each Obligor (or, in the alternative, a
certification to the effect that none of such documents has been
modified since delivery thereof on the Closing Date pursuant to
the Credit Agreement or (in the case of Shoe Corporation) since
delivery thereof on the date of the First Amendment to Credit
Agreement) and of all corporate authority for each Obligor,
including, without limitation, board of director resolutions and
evidence of the incumbency of officers for each Obligor, with
respect to the execution, delivery and performance of (i) this
Agreement and the Credit Agreement as amended hereby (in the case
of the Borrower and Baker), (ii) the Guarantee (in the case of
each Obligor other than the Borrower) and the Pledge Agreement (in
the case of each Obligor party to the Pledge Agreement), in each
case after giving effect to the amendments contemplated by Section
2 of this Second Amendment Agreement, and each other document to
be delivered by each of the Obligors from time to time in
connection with the Credit Agreement as amended hereby (and the
Agent and each Bank may conclusively rely on such certificate
until it receives notice in writing from each of the Obligors to
the contrary);
(d) An opinion of Goodwin, Procter & Hoar, counsel to the Obligors
with respect to the transactions contemplated by this Agreement
and the Credit Agreement and all other Operative Documents and
Financing Agreements as amended hereby; and
(e) Such other documents relating to the transactions contemplated by
this Agreement as the Agent or any Bank or special New York
counsel to the Agent may reasonably request.
- 8 -
<PAGE> 9
Section 5. MISCELLANEOUS. Except as expressly herein provided, the
Credit Agreement and all other Operative Documents and Financing Agreements
shall remain unchanged and in full force and effect. This Agreement may be
executed in any number of counterparts, all of which taken together shall
constitute one and the same amendatory instrument and any of the parties hereto
may execute this Agreement by signing any such counterpart. This Agreement
shall be governed by, and construed in accordance with, the law of the
Commonwealth of Massachusetts.
- 9 -
<PAGE> 10
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered as of the day and year first above written.
JBI, INC.
By /s/ ALAN I. WEINSTEIN
---------------------------
Title: Senior Executive
Vice President
J. BAKER, INC.
By /s/ ALAN I. WEINSTEIN
---------------------------
Title: Senior Executive
Vice President
SHAWMUT BANK, N.A.
By /s/ ROGER A. STONE
---------------------------
Title: Director
THE FIRST NATIONAL BANK OF BOSTON
By /s/ MITCHELL B. FELDMAN
---------------------------
Title: Director
FLEET BANK OF MASSACHUSETTS, N.A.
By /s/ BARRIE KING
---------------------------
Title: Vice President
NATIONAL WESTMINSTER BANK USA
By /s/ PAUL CHAU
---------------------------
Title: Assistant Vice President
CITIZENS SAVINGS BANK
By /s/ MARIAN L. BARRETTE
---------------------------
Title: Vice President
- 10 -
<PAGE> 11
STANDARD CHARTERED BANK
By /s/ BRIAN TAYLOR
----------------------------
Title: Assistant Vice President
By /s/ GERARD LOB
----------------------------
Title: Vice President
THE YASUDA TRUST & BANKING CO., LTD.
By /s/ NEIL CHAU
----------------------------
Title: Vice President
FUJI BANK, LIMITED
By /s/ KATSUNORI NOZAWA
----------------------------
Title: Vice President and
Manager
SHAWMUT BANK, N.A.,
as Agent
By /s/ ROGER A. STONE
----------------------------
Title: Director
We hereby acknowledge, consent
and agree to the terms of the
foregoing Second Amendment
Agreement and confirm that
our obligations under the
Guarantee and the Pledge
Agreement shall remain
unchanged and in full
force and effect.
Dated: April 29, 1994
SPENCER COMPANIES, INC.
By /s/ ALAN I. WEINSTEIN
- - ------------------------------
Title: Senior Executive
Vice President
- 11 -
<PAGE> 12
SPENCER NO. 301 CORP.
By /s/ ALAN I. WEINSTEIN
- - -------------------------------
Title: Senior Executive
Vice President
JBI HOLDING CO., INC.
By /s/ ALAN I. WEINSTEIN
- - -------------------------------
Title: President
THE CASUAL MALE, INC.
By /s/ ALAN I. WEINSTEIN
- - -------------------------------
Title: Senior Executive
Vice President
WGS CORP.
By /s/ ALAN I. WEINSTEIN
- - -------------------------------
Title: Senior Executive
Vice President
TCM HOLDING COMPANY, INC.
By /s/ ALAN I. WEINSTEIN
- - -------------------------------
Title: President
MORSE SHOE, INC.
By /s/ ALAN I. WEINSTEIN
- - -------------------------------
Title: Senior Executive
Vice President
BUCKMIN, INC.
By /s/ ALAN I. WEINSTEIN
- - -------------------------------
Title: Senior Executive
Vice President
- 12 -
<PAGE> 13
ELM EQUIPMENT CORP.
By /s/ ALAN I. WEINSTEIN
- - ------------------------------
Title: Senior Executive
Vice President
JARED CORPORATION
By /s/ ALAN I. WEINSTEIN
- - ------------------------------
Title: Senior Executive
Vice President
MORSE SHOE (CANADA) LTD.
By /s/ ALAN I. WEINSTEIN
- - ------------------------------
Title: Senior Executive
Vice President
MORSE SHOE INTERNATIONAL, INC.
By /s/ ALAN I. WEINSTEIN
- - ------------------------------
Title: Senior Executive
Vice President
ISAB, INC.
By /s/ ALAN I. WEINSTEIN
- - ------------------------------
Title: Senior Executive
Vice President
WHITE CAP FOOTWEAR, INC.
By /s/ ALAN I. WEINSTEIN
- - ------------------------------
Title: Senior Executive
Vice President
SHOE CORPORATION OF AMERICA, INC.
By /s/ ALAN I. WEINSTEIN
- - ------------------------------
Title: Senior Executive
Vice President
- 13 -
<PAGE> 1
<TABLE>
EXHIBIT 11
J. BAKER, INC. AND SUBSIDIARIES
COMPUTATION OF PRIMARY AND FULLY DILUTED EARNINGS PER SHARE*
(UNAUDITED)
<CAPTION>
Quarter Ended
April 30, May 1,
1994 1993
-------- --------
<S> <C> <C>
PRIMARY:
Net Earnings $ 3,197,785 $2,482,799
=========== ==========
Weighted average number of common
shares outstanding 13,813,399 13,538,023
=========== ==========
Earnings Per Share $0.231 $0.183
=========== ==========
ASSUMING FULL DILUTION:
Net Earnings1 $ 3,981,785 $3,254,549
=========== ==========
Weighted average number of common
shares outstanding 13,813,399 13,538,023
Dilutive effect of outstanding stock options 312,927 346,576
Dilutive effect of convertible subordinated debt 4,341,085 4,341,085
----------- ----------
Weighted average number of common
shares as adjusted 18,467,411 18,225,684
=========== ==========
Earnings per share $0.216 $0.179
=========== ==========
<FN>
- - --------------
1 For the purpose of calculating fully diluted earnings per share the
conversion of the 7% convertible debt results in an after tax benefit from
reduced interest expense.
* This calculation is submitted in accordance with Item 601(b)(11) of
Regulation S-K.
</TABLE>
