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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
(Mark One)
[ X ] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934 (FEE REQUIRED)
For the fiscal year ended January 28, 1995
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934 (NO FEE REQUIRED)
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)
Securities registered pursuant to Section 12(b) of the Act:
NONE
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, par value $.50 per share
7% Convertible Subordinated Notes Due 2002
Preferred Stock Purchase Rights
(Title of Class)
Indicate by check mark if disclosure of delinquent filers pursuant
to Item 405 of Regulation S-K is not contained herein and will not
be contained, to the best of the registrant's knowledge, in
definitive proxy or information statements incorporated by
reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ ]
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
The aggregate market value of the voting stock held by
nonaffiliates of the registrant was approximately $201,410,517 as
of March 31, 1995 (based on the last reported sales price of
the registrant's stock in the over-the-counter market on such
date).
The number of shares outstanding of the registrant's common stock
as of March 31, 1995 was 13,846,637.
DOCUMENTS INCORPORATED BY REFERENCE
Certain portions of the definitive proxy statement for the 1995
Annual Meeting of Stockholders are incorporated by reference in
Part III.
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J. Baker, Inc.
Form 10-K Report
Year Ended January 28, 1995
Part I
DESCRIPTION OF BUSINESS
General
J. Baker, Inc. ("J. Baker" or the "Company", which term
shall include all subsidiaries of the Company) is engaged in the
retail sale of footwear and apparel. The Company sells footwear
through self-service licensed shoe departments in mass
merchandising department stores, through full and semi-service
licensed shoe departments in department and specialty stores and
through its Fayva chain of self-selection family shoe stores and
its Parade of Shoes chain of women's shoe stores. In all of these
operations, the Company emphasizes the sale of quality footwear at
comparatively low prices. The Company is engaged in the retail
sale of apparel through its chain of Casual Male Big & Tall men's
stores which sells sportswear to the larger size man, and through
its chain of Work 'n Gear work clothing stores which sell utility
workwear, uniforms and personalized work clothes, as well as
uniforms for laboratory and medical purposes.
The Company's businesses are seasonal, with its largest
footwear volume generated in the Easter, back to school and
Christmas seasons. The Casual Male Big & Tall division does its
largest sales volumes in June (Father's Day) and the Christmas
season, and the Work 'n Gear stores generate their largest sales
volume during the second half of the fiscal year. On a combined
basis, sales during the second half of each fiscal year have
consistently exceeded those during the first half of the year.
Unseasonable weather may affect sales of shoes and boots as well
as of work clothing, especially during the traditional high-volume
periods.
The Company is required to carry a substantial inventory
in order to provide prompt deliveries to its licensed shoe
departments, Parade of Shoes, Fayva, Casual Male Big & Tall, and
Work 'n Gear stores. Order backlogs, however, are not material to
the Company's business. The inventories needed in the operation
of the Company's footwear and apparel businesses are currently
available from a number of domestic and overseas sources, with no
single source accounting for more than seven percent of the
Company's merchandise.
The Company benefits by "most favored nation" provisions
in trade agreements between the United States and certain
countries in which the Company's suppliers are located. From time
to time, the United States Congress has proposed legislation which
could result in such provisions being struck from particular trade
agreements, which could, in turn, result in higher costs to the
Company. There has been extensive Congressional debate with
respect to the "most favored nation" provision of the trade
agreement between the United States and China which was renewed
for one year in July, 1992 and has since been extended through
May, 1995. The failure of this provision to be renewed would
likely result in substantially increased costs to the Company in
the purchase of footwear from China. However, the Company
believes that all of its competitors in the footwear industry
would be similarly affected.
Industry Segments
The Company is engaged in the sale of footwear and
apparel manufactured by others. Financial information with
respect to the Company's industry segments can be found in Note 14
to the Consolidated Financial Statements.
Footwear
Licensed Shoe Department Operations
In a licensed shoe department operation, the store and
the Company enter into a license agreement under which the Company
has the exclusive right to operate a shoe department in the store
for a period of years. The department is operated under the store
name in space supplied by the store, and the store collects
payments from customers and credits the Company. The Company pays
the store a license fee, generally a percentage of net sales, for
the right to operate the department and for the use of the space.
The license fee ordinarily covers utilities, janitorial service,
cash collection and handling, packaging and advertising.
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In its licensed shoe department operations, the Company
sells a wide variety of family footwear, including men's, women's
and children's dress, casual and athletic footwear as well as work
shoes and slippers. Most of the shoes offered by the Company in
its licensed departments are sold under the Company's trademarks
or on an unbranded basis, although the Company also sells name
brand merchandise at discounted prices in its mass merchandising
licensed accounts.
On January 30, 1993, the Company acquired all of the
outstanding stock of Morse Shoe, Inc. ("Morse"), in a merger
whereby Morse became a wholly owned subsidiary of the Company. As
an operator of licensed footwear departments and of the Fayva
chain of family shoe stores, the merger of Morse into the Company
resulted in the addition of approximately 500 licensed shoe
departments operated by the Company. For additional information
on the acquisition of Morse, see Note 3 to the Consolidated
Financial Statements.
On November 19, 1993, the Company acquired a majority
ownership of the outstanding stock of Tishkoff Enterprises, Inc.
("TEI") in a merger with TEI, an operator of full service,
semi-service and self service licensed shoe departments in
department and specialty stores. The remaining shares of TEI were
acquired by the Company on December 13, 1993 and subsequent to the
merger, the corporate name of TEI was changed to Shoe Corporation
of America ("SCOA"). As of January 28, 1995, SCOA operated 448
licensed footwear departments. For additional information on the
acquisition of SCOA, see Note 2 to the Consolidated Financial
Statements.
Merchandise sold by the Company's SCOA division is
predominantly in conventional, full service department stores and
includes a strong representation of national brands complemented
by private label merchandise. A small portion of the licensed
department business conducted by SCOA is in specialty apparel
accounts. The Company's licensed shoe departments in mass
merchandising department stores are operated on a self-service
basis, but those departments operated by SCOA in conventional
department and specialty stores are on a semi-service, full
service or self-service basis. The Company's personnel employed
in particular departments are responsible for stocking and layout
of shelves, responding to customer inquiries and related
administrative tasks.
The Company and its predecessors have operated licensed
shoe departments in mass merchandising department stores for more
than forty years. The Company's SCOA division has operated
licensed shoe departments in mass merchandising and conventional
department and specialty stores for approximately nine years.
Sales in licensed departments accounted for 48.9%, 46.5% and 49.9%
of the Company's total revenues in the years ended January 28,
1995, January 29, 1994 and January 30, 1993, respectively. At
January 28, 1995, the Company operated a total of 1,690 licensed
shoe departments under license agreements with 44 different
department and specialty store operators. During fiscal 1995, the
Company opened 392 departments and closed 232, representing a net
increase of 160 units for the year. The Company's licensed
departments are located in forty-two states and in the District of
Columbia.
The Company conducts its licensed department operations
under written agreements for fixed terms. Of the 1,690 licensed
shoe departments which the Company operated at January 28, 1995,
1,334, or 79% are covered by agreements with terms expiring in
less than five years, 49 or 3% are covered by agreements with
terms expiring in five to ten years, and 307, or 18% are covered
by agreements with terms expiring in more than ten years.
Of the Company's licensed departments at January 28,
1995, 306 were operated under license with Ames Department Stores,
Inc. ("Ames"), a major mass merchandising retailer in the eastern
United States. Ames, which had filed for protection under Chapter
11 of the United States Bankruptcy Code in April, 1990, emerged
from bankruptcy on January 6, 1993. Pursuant to a stipulation
entered into between the Company and Ames, the Company's license
agreement was modified, amended and assumed by Ames and the
Company settled its $13.7 million pre-petition claim with Ames.
For additional information on the Ames bankruptcy, see Note 4 to
the Consolidated Financial Statements. For the fiscal year ended
January 28, 1995, Ames accounted for 9.5% of the Company's total
revenues.
At January 28, 1995, the Company also operated 92
departments under license in the Jamesway discount department
store chain ("Jamesway"), which is concentrated in the
mid-Atlantic region of the United States, and 113 licensed
departments in the Rose's Stores, Inc. chain ("Rose's"), which
stores are concentrated in the southeastern region of the United
States. Operations under the agreements with Rose's and Jamesway
accounted for a total of 5.8% of the Company's net sales in the
year ended January 28, 1995.
On July 8, 1993, July 19, 1993 and September 6, 1993
Fishers Big Wheel, Inc. ("Fishers", a former licensor of the
Company), Jamesway and Rose's, respectively, 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
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from Fishers, Jamesway and Rose's.
On August 29, 1994, Jamesway filed its First Amended Plan
of Reorganization and on December 12, 1994, its Second Amended
Plan of Reorganization was confirmed by the Bankruptcy Court. On
January 18, 1995, the Jamesway Plan was consummated and Jamesway
emerged from bankruptcy, assumed the Company's license agreement
and, on February 1, 1995, paid the Company its pre-petition
arrearage.
On August 1, 1994, Rose's filed its Plan of
Reorganization, which Plan was confirmed on December 14, 1994.
Rose's anticipates consummation of its plan and emergence from
bankruptcy on or about April 30, 1995. On December 5, 1994, the
Bankruptcy Court approved a joint motion filed by the Company and
Rose's to assume the Company's license agreement with Rose's and
to cure all pre-petition arrearage owed to the Company. The
Company expects to collect its pre-petition arrearage by January,
1996. At January 28, 1995, carried on the balance sheet in Other
Assets are deferred lease acquisition costs of $2.2 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 January 28, 1995.
During fiscal 1995, Jamesway and Rose's closed 115
stores. The Company does not expect their Bankruptcy proceedings
or the aforementioned store closings to have a material adverse
effect on the Company's future earnings. Combined sales in
Jamesway and Rose's totaled $60.9 million for the fiscal year
ended January 28, 1995.
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 has
filed proofs of claim to preserve its rights to recover its
pre-petition arrearage. Sales in Fishers for the year ended
January 28, 1995 were $1.6 million.
At January 28, 1995, the Company's Morse subsidiary
operated 154 departments under license in the Hills Department
Store Company chain ("Hills"), which is concentrated in the
Pennsylvania, Ohio and New York regions, 136 departments under
license from Bradlees, Inc. ("Bradlees"), a chain located
primarily in the northeast region of the United States and 126
departments under license from ShopKo Stores ("ShopKo"), a chain
located primarily in the upper mid-west region of the United
States. Operations under the agreements with Hills, Bradlees and
ShopKo accounted for a total of 15.6% of the Company's net sales
in the year ended January 28, 1995.
On February 4, 1991, Hills filed for protection under
Chapter 11 of the United States Bankruptcy Code. As of the date
of the Hills Chapter 11 filing, Hills owed Morse approximately
$4.0 million in outstanding accounts receivable due under the
license agreement. On September 10, 1993, Hills' First Amended
Consolidated Plan of Reorganization ("Hills Plan") was confirmed
by the bankruptcy court. On September 9, 1993, the Company and
Hills filed a joint motion with the bankruptcy court seeking an
order rejecting the license agreement between the parties,
approving a revised unsecured claim of $5.6 million and
authorizing the execution of a new license agreement between Hills
and the Company on substantially the same terms as had existed
previously. On October 19, 1993, the bankruptcy court approved
the order, pursuant to which the Company has received the
following amounts with respect to its claim: $793,000 in cash,
51,800 shares of Hills common stock, 44,900 shares of Hills
preferred stock and promissory notes from Hills in the amount of
$941,000 bearing interest at 10.25% and maturing in 2003. These
amounts represent 95.5% of the Company's expected distribution
under the Hills Plan. The Company expects Hills to distribute the
balance of the expected distribution during fiscal 1996.
At January 28, 1995, the Company's SCOA division operated
448 licensed shoe departments located in fourteen chains. Major
chains serviced by the division include: Carson Pirie Scott & Co.
("Carson's", with headquarters in Milwaukee, Wisconsin), Uptons
Department Stores, Inc. ("Uptons", with headquarters in Norcross,
Georgia), Younkers, Inc. ("Younkers", with headquarters in Des
Moines, Iowa) and Goody's Family Clothing, Inc. ("Goody's", with
headquarters in Knoxville, Tennessee) as well as Zion's
Cooperative Mercantile Institution ("ZCMI", with headquarters in
Salt Lake City, Utah) and Winkelman Stores, Inc. ("Winkelman's",
with headquarters in Plymouth, Michigan). SCOA currently manages
shoe departments located in thirty-one states throughout the
United States. Sales in SCOA licensed departments accounted for
12.1% of the Company's total revenue during the fiscal year ended
January 28, 1995.
The Company's licensed shoe department business faces
competition at two levels: (1) for sales to retail customers and
(2) for the business of the department store chains which are its
shoe licensor customers. The Company's
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retail shoe businesses compete with the shoe departments of
department store chains, conventional shoe chains, specialty
stores and independent retailers. The Company's success in its
licensed department operations is substantially dependent upon the
success of the department store chains in which the Company
operates licensed departments. Within the particular market that
is served by the mass merchandising department store chains, the
Company believes that the primary competitive factors are the
price and the breadth and suitability of the selection of footwear
that is offered.
The Company also faces potential competition from the
in-house operational capabilities of its licensors. Because of
the large scale of many licensing arrangements and years of
commitment that are involved, the Company has observed that
changes in these arrangements do not frequently occur and are more
often initiated by external factors such as mergers or
acquisitions involving the licensors or business terminations by
other licensees, rather than by competition among licensees for
the business of a licensor. To the extent that there is active
competition for new business in this area, the Company believes
that the principal factors weighed by a potential licensor are the
quality of the licensee's operations, as reflected by sales
results, and the price paid to the licensor in the form of the
license fee.
The loss of one or more of the foregoing licensors could
have a material adverse effect on the Company.
Due to a general contraction in the retail industry and
the filing for protection under Chapter 11 of the United States
Bankruptcy Code by certain of the Company's licensors, the Company
may experience declines in the number of licensed departments that
it operates.
Wholesale Operations
Although the Company does not currently perform wholesale
services for any of its customers, the Company performs the same
services for wholesale customers that it does for its licensed
departments, except that the wholesale customer operates its shoe
departments with personnel which it hires and owns the footwear
inventory which it sells at retail for its own account. The
Company supplies its wholesale customers under exclusive
agreements. Shoes are sold to wholesale customers when shipped
from the Company's distribution center, generally at a fixed
percentage of the retail selling price.
The Company's wholesale agreement with Caldor, Inc.
("Caldor") terminated in July, 1994. Sales to Caldor in fiscal
1995 were $17.1 million. The Company believes that the reduction
in wholesale revenues in fiscal 1995 and thereafter will not have
a material impact on the Company's future earnings. In the year
ended January 28, 1995, sales to Caldor accounted for 1.6% of the
Company's total revenues.
Sales to wholesale customers accounted for 1.6%, 4.4% and
7.1% of the Company's total revenues in the years ended January
28, 1995, January 29, 1994 and January 30, 1993, respectively.
Parade of Shoes Operations
The Company's Parade of Shoes chain emphasizes the retail
sale of quality, primarily leather women's shoes. The stores
generally occupy 2,000 to 3,000 square feet of retail space
located in suburban strip shopping centers which are typically
anchored by a major supermarket, a regional department store chain
or a mass merchandising retailer. In addition, the Company has
also begun a program of opening Parade of Shoes stores in major
metropolitan areas. The stores generally feature from 7,000 to
9,000 items available for selection in a casual, self-service
atmosphere. The stores emphasize items that appeal to women
between 18 and 44 years of age and also offer extensive selections
oriented toward pre-teens, teenagers and senior citizens.
Sales from Parade of Shoes stores accounted for 11.3%,
9.6% and 14.4% of the Company's total revenues in the years ended
January 28, 1995, January 29, 1994 and January 30, 1993,
respectively.
A total of 191 Parade of Shoes stores were in operation
in twelve states in the eastern and midwestern United States and
the District of Columbia on January 28, 1995. During the year,
the Company opened 46 stores and closed 16 stores. The Company
believes that the same competitive factors that affect its
licensed department operations, as well as the availability of
leather and brand name shoes and the general style and quality of
merchandise, are present in the market that is served by the
Company's Parade of Shoes chain. Among competitors of Parade of
Shoes are department stores and other specialty shoe chains. The
Company may experience increased direct competition with Parade of
Shoes based on comparable merchandising approaches in the future.
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Fayva Operations
The Fayva shoe chain operates self-selection retail
stores which offer popularly-priced footwear for the entire
family. The Fayva stores are located in major downtown areas,
neighborhood locations, strip shopping centers, suburban shopping
centers and malls. The major markets for the Fayva stores are in
the northeastern portion of the United States, Florida, Los
Angeles, Houston and Chicago. The Company operated 368 Fayva
stores at January 28, 1995, located in a total of sixteen states.
During the year, the Company opened two stores and closed
twenty-nine stores.
The retail stores, which average 3,200 square feet,
emphasize convenient self-selection, popular pricing and a broad
selection of fashionable footwear, including men's, women's and
children's dress, casual, athletic and work shoes, slippers and
accessories. Although branded athletic footwear is offered in the
Fayva stores, most of the footwear offered by Fayva stores is sold
under Company brand names. Sales in the Fayva chain amounted to
16.5% and 19.5% of the Company's revenue during the fiscal years
ended January 28, 1995 and January 29, 1994, respectively.
The principal competition of the Fayva stores includes
conventional shoe chains, the shoe departments of department store
chains, specialty stores and independent retailers. Among such
competitors is Payless Shoe Source, a subsidiary of The May
Department Stores Company ("Payless"). With the announced
intention of Payless to expand its operations in the northeastern
portion of the United States and the similar expansion of other
competitors, the Fayva stores will face increased competition for
sales to retail customers.
Apparel
Casual Male Big & Tall
According to retailer and manufacturer estimates, big
(42" waist or larger) and tall (6'3" or taller) men represent an
estimated 10% to 13% of the adult male population in the United
States. The Company believes the clothing demands of these
customers have not been met. The big and tall customer frequently
has difficulty finding an adequate selection of apparel in his
size at department and men's specialty stores. Furthermore, only
a limited number of big and tall specialty stores exist, and these
typically have a narrow selection of current sportswear fashion.
The majority of big and tall specialty stores are operated by
companies with less than five units.
Casual Male Big & Tall stores offer brand name and
private label sportswear in a wider variety of styles, colors and
fabrics than most other big and tall retailers. Merchandise is
generally priced lower than department stores and other
traditional retailers of big and tall apparel. The Company
started fiscal 1995 with 254 stores and ended the year with 319
stores, having opened 65 stores. The 319 stores are located in
forty states, predominantly in the eastern half of the United
States. During fiscal 1995, however, Casual Male expanded into
western regional markets primarily through the opening of stores
in California. Additional expansion in this region is anticipated
for fiscal 1996. Sales in the Casual Male Big & Tall stores
accounted for 17.4%, 16.1% and 23.0% of the Company's total
revenues for the years ended January 28, 1995, January 29, 1994
and January 30, 1993, respectively.
The Company's Casual Male Big & Tall stores face
competition from department stores, specialty stores, discount
stores, mail order companies, off-price and other retailers who
sell big and tall merchandise. While competition exists on a
local level from smaller chains, Casual Male faces competition on
a national scale from Repp, Ltd., a division of Edison Brothers,
Inc. There can be no assurance that other retailers will not
adopt purchasing and marketing concepts similar to those of the
Casual Male Big & Tall chain. The Company believes the fashion
and selection of its merchandise, its favorable prices and its
ability to obtain desirable store locations are important
factorsin enabling it to compete effectively.
Work 'n Gear
Currently located in twelve states throughout the
Northeastern United States, the Work 'n Gear stores sell utility
workwear and footwear which is generally used by persons engaged
in outdoor labor activities. The Work 'n Gear stores also sell
laboratory and medical uniforms as well as personalized uniforms
for maintenance and other uses. The Company operated 61 Work 'n
Gear stores at January 28, 1995, having opened nine stores during
fiscal 1995.
Traditional competition for utility workwear has existed
in certain large, full-service department stores, which,
increasingly, are discontinuing this line of apparel. Competition
also exists from local Army and Navy stores but, to the Company's
knowledge, no specific specialty store of the Work 'n Gear variety
exists on a national basis. Competition in the medical uniform
business of Work 'n Gear is found in small storefront vendors of
medical and laboratory uniforms as well as in several larger
companies, such as Life Uniform Stores, Z & H Uniforms and
WearGuard Corporation, which
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sells primarily through its catalog.
Neither the utility workwear nor the uniform businesses
of the Work 'n Gear stores are dependent upon any one supplier for
its inventory. The customer base is the diverse population of
working men and women in the United States, and no specific
customer accounts for any substantial portion of the business.
Sales in the Work 'n Gear stores accounted for 4.2%, 3.9%
and 5.6% of the Company's total revenues for the years ended
January 28, 1995, January 29, 1994 and January 30, 1993,
respectively.
Trademarks
The Company has no patents, franchises or concessions,
except for agreements granting it the right to operate licensed
departments. The Company owns certain trademarks which it uses in
its business. The Company does not consider these trademarks to
be materially important to its business.
Research and Development
The Company does not engage in any Company-sponsored
research or customer-sponsored research.
Environment
The Company has not been required to make any material
capital equipment expenditures, or suffered any material effect on
its earnings or competitive position, as a result of compliance
with federal, state or local environmental regulations.
Employees
As of January 28, 1995, the Company employed
approximately 7,116 persons full-time and 7,538 persons part-time,
of whom approximately 5,663 full-time and 7,522 part-time
employees were engaged in retail operations at the store level.
Approximately 483 of the Company's full-time and part-time
employees are covered by collective bargaining agreements. The
Company believes that its employee relations are good.
Executive Officers of the Company
Name Age Office
______ _____ ________
Sherman N. Baker 75 Chairman of the Board
Jerry M. Socol 53 President and Chief Executive Officer
Alan I. Weinstein 52 Senior Executive Vice President, Chief
Financial Officer, Chief Administrative
Officer and Secretary
Linda B. Kanner 50 Senior Executive Vice President,
President of Parade of Shoes and General
Manager of International Shoe Operations
Larry I. Kelley 52 Executive Vice President and
President and Chief Executive
Officer of The Casual Male
John E. Lattanzio 55 Executive Vice President and
President of Fayva
James Lee 48 Executive Vice President and President
of the Licensed Discount Division
Stuart M. Needleman 47 Executive Vice President and
President of Work 'n Gear
Dennis B. Tishkoff 52 Executive Vice President and
President and Chief Executive
Officer of Shoe Corporation of America
Mr. Baker has been the Chairman of the Board of the
Company since March, 1990. From 1970 until March, 1990, Mr. Baker
served as Chief Executive Officer of the Company and its
predecessor.
Mr. Socol has been President of the Company since
September, 1988 and Chief Executive Officer of the Company since
March, 1990. Prior to joining the Company in 1988, Mr. Socol was
President and Chief Executive
<PAGE>8
Officer of Filene's Department Stores, a division of the May
Department Stores Company, from May to June, 1988. Mr. Socol was
Chairman and Chief Executive Officer of Filene's Department
Stores, a division of Federated Department Stores, Inc., from
August, 1987 to May, 1988. From January, 1984 to August, 1987, Mr.
Socol was President of Filene's Department Stores.
Mr. Weinstein has held the positions of Senior Executive
Vice President, Chief Financial Officer and Secretary of the
Company since July, 1985. He was also appointed Chief
Administrative Officer in 1988. Mr. Weinstein joined the
Company's predecessor in 1968 as Assistant Controller and has held
a variety of positions of increasing responsibility in finance and
administration since that time.
Ms. Kanner has held the positions of Senior Executive
Vice President, President of Parade of Shoes and General Manager
of International Shoe Operations since January, 1995. Prior to
that, she had been Senior Executive Vice President and Director of
Shoe Merchandising and Operations for the Company since April,
1991. Before joining the Company, Ms. Kanner was Executive Vice
President of the Bank of New England from May, 1989 to April, 1991
serving as chief marketing officer for advertising, sales support
and product management throughout the bank. Ms. Kanner was
employed by the Bank of Boston from November, 1984 to May, 1989,
where she was a division executive in charge of credit card
consumer loan and retail product management. Ms. Kanner was also
a member of MasterCard's national marketing strategic advisory
committee. Ms. Kanner is the daughter of Mr. Baker.
Mr. Kelley has held the positions of Executive Vice
President of the Company and President and Chief Executive Officer
of The Casual Male, Inc. since June, 1991. Before joining the
Company, Mr. Kelley was President of Weathervane Stores from
September, 1988 to May, 1991. From June, 1987 to September, 1988,
Mr. Kelley was the President of Brauns Fashion. In November,
1990, Mr. Kelley filed for protection under the United States
Bankruptcy Code as a result of adverse personal real estate
investments made prior to his becoming an executive officer of the
Company. In December, 1993, Mr. Kelley was discharged from all
pre-petition debts and obligations and has emerged from
bankruptcy.
Mr. Lattanzio has held the positions of Executive Vice
President of the Company and President of the Company's Fayva
division since June, 1993. Before joining the Company, Mr.
Lattanzio was Senior Vice President at Kobacher Company from 1990
to 1993. Mr. Lattanzio joined Kobacher Company in 1960 and held
a variety of positions including President of the Fashion
Division, and President of Picway Shoes and Patrini Shoes.
Mr. Lee has held the positions of Executive Vice
President of the Company and President of the Company's Licensed
Discount Division since January, 1995. From August, 1994 through
December, 1994, Mr. Lee was Senior Vice President and Director of
Distribution for the Company's Fayva division. Prior to joining
the Company, Mr. Lee was Senior Vice President and General
Merchandise Manager of Caldor Stores.
Mr. Needleman has held the positions of Executive Vice
President of the Company and President of the Company's Work 'n
Gear division since October, 1993. From 1989 through October,
1993, Mr Needleman held the position of Senior Vice President and
Director of Operations of The Casual Male, Inc.
Mr. Tishkoff has held the positions of Executive Vice
President of the Company and President of the Company's SCOA
Division since November, 1993, when SCOA was acquired by the
Company. Before joining the Company, Mr. Tishkoff was Chairman,
President and Chief Executive Officer of Tishkoff Enterprises,
Inc. d/b/a Shoe Corporation of America.
PROPERTIES
The Company's executive, buying and general offices and
one of its footwear distribution centers ("home office") are
located in Canton, Massachusetts. This facility is located at 555
Turnpike Street, Canton, Massachusetts on 37 acres of land and is
owned by the Company. The home office contains approximately
750,000 square feet of space, including approximately 150,000
square feet of office space.
The Company leases a building at 40 Industrial Drive,
Canton Massachusetts that serves as a warehouse for its
Massachusetts footwear operations. The building contains
approximately 33,000 square feet of warehouse space. The lease on
this facility expires on June 30, 1997. The Company has one
two-year option to renew the lease.
<PAGE>9
The Company leases a building at 65 Sprague Street,
Readville, Massachusetts that serves as the administrative offices
for Casual Male and Work 'n Gear, and as distribution center for
the Casual Male Big & Tall and Work 'n Gear stores. The building
contains approximately 75,000 square feet of office space and
approximately 375,000 square feet of warehouse/distribution space.
The lease on this facility expires on May 31, 1999. The Company
has two consecutive five year options to renew the lease.
The headquarters for the Company's SCOA division and
SCOA's footwear distribution center is located at 2035 Innis Road,
Columbus, Ohio. The facility is on 17.4 acres of land and is
owned by the Company. The building contains approximately 355,000
square feet, including approximately 18,000 square feet of office
space and 337,000 square feet of warehouse/distribution space.
As of January 28, 1995, the Company had 191 Parade of
Shoes stores, all operating in leased premises ranging from 1,250
to 11,900 square feet, with average space of approximately 2,400
square feet per store and total space of approximately 456,000
square feet. The leases run for initial terms of between three
and ten years and average approximately seven years. A majority
of the leases are renewable at the option of the Company for terms
of three to five years.
As of January 28, 1995, the Company operated 319 Casual
Male Big & Tall stores, all in leased premises ranging from 1,875
to 8,400 square feet, with total space of approximately 1,071,000
square feet. A majority of the leases run for initial terms of
five years. Most are renewable at the option of the Company for
one or more five year terms.
As of January 28, 1995, the Company operated 61 Work 'n
Gear stores, all in leased premises ranging from 3,200 square feet
to 6,200 square feet, with total space of approximately 261,000
square feet. A majority of the leases run for initial terms of
five years. Most are renewable at the option of the Company for
one or more five year terms.
As of January 28, 1995, the Company operated 368 Fayva
stores, all in leased premises ranging from 1,645 to 6,800 square
feet, with total space of approximately 1,156,000 square feet.
The leases run for initial terms of between five and ten years.
Approximately one-third are renewable at the option of the Company
for terms of five to ten years.
See "DESCRIPTION OF BUSINESS - Industry Segments,
Footwear, Licensed Shoe Department Operations", for information
regarding the Company's licenses to operate shoe departments
inretail stores of its licensors.
LEGAL PROCEEDINGS
The Company is engaged in the following significant
litigation:
On November 10, 1993, a federal jury in Minneapolis, MN
returned a verdict assessing royalties of $1,550,000, and
additional damages of $1,500,000 against the Company in a patent
infringement suit brought by Susan Maxwell with respect to a
device used to connect pairs of shoes. Certain post trial motions
were filed by Susan Maxwell seeking treble damages, attorney's
fees and injunctive relief, which motions were granted on March
10, 1995. Judgment will be entered for Maxwell. The Company
intends to appeal the judgment and believes it has substantial
legal arguments to justify the judgment being overturned at the
appellate level. In the event the Company were not to prevail,
however, total damages, including attorney's fees and interest,
are estimated to be approximately $10 million.
A complaint was also filed by Susan Maxwell in November,
1992 against Morse alleging infringement of the patent referred to
above. The case is currently in the discovery phase, and a trial
date has not yet been set. The Company believes that Ms.
Maxwell's recovery against Morse, if any, will be less than her
recovery against the Company because the number of allegedly
infringing pairs of shoes is substantially less than those
involved in the Company's case. Further, the Company believes
that any recovery may be limited to the number of pairs allegedly
infringing the patent during the time period after the
confirmation of Morse's Chapter 11 Plan of Reorganization on
December 20, 1991.
Other than as described above, the Company is not a party
to any material legal proceedings.
SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to a vote of security holders
during the fourth quarter of the fiscal year covered by this
report.
<PAGE>10
PART II
________
MARKET FOR REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER
MATTERS.
Market Information
The Company's Common Stock is traded in the over-the-
counter market and is quoted on the National Association of
Securities Dealers, Inc. Automated Quotation System ("NASDAQ")
under the symbol "JBAK".
The following table sets forth the high and low last
reported sales prices, as reported by NASDAQ, for the Company's
Common Stock for each quarterly period during the years ended
January 28, 1995 and January 29, 1994. The prices set forth below
do not include retail mark-ups, mark-downs or commissions.
<TABLE>
<S> <C> <C>
Year Ended January 28, 1995 High Low
--------------------------- ---- ---
First Quarter $22 $18 1/8
Second Quarter 21 3/4 18
Third Quarter 21 1/8 17 1/8
Fourth Quarter 17 14
Year Ended January 29, 1994 High Low
--------------------------- ---- ---
First Quarter $22 1/4 $17 1/8
Second Quarter 23 3/4 19 5/8
Third Quarter 25 3/4 17 3/8
Fourth Quarter 19 1/8 16
</TABLE>
Holders
The approximate number of holders of record of the
Company's Common Stock as of March 31, 1995 was 484. The Company
believes that the actual number of beneficial owners of the
Company's Common Stock is substantially greater than the stated
number of holders of record, because a portion of the Common Stock
outstanding is held in "street name".
Dividends
On March 2, 1987, the Board of Directors of the Company
adopted a policy of paying quarterly dividends. For each quarter
thereafter, the Company has paid a 1 1/2 cents per share dividend.
The Company's unsecured revolving credit agreement and
its senior subordinated notes agreement limit the amount of cash
dividends that may be paid to stockholders. For additional
information see Note 7 of the Notes to Consolidated Financial
Statements.
Other
On December 15, 1994, the Board of Directors of the
Company adopted a Shareholder Rights Agreement (the "Rights
Agreement") designed to enhance the Company's ability to protect
shareholder interests and to ensure that shareholders receive fair
treatment in the event any coercive takeover attempt of the
Company is made in the future. Pursuant to the Rights Agreement,
the Board of Directors declared a dividend distribution of one
preferred stock purchase right (the "Right") for each outstanding
share of common stock of the Company to shareholders of record as
of the close of business on January 6, 1995. Each right entitles
the holder to purchase from the Company a unit consisting of one
ten thousandth (1/10,000) of a share of Series A Junior
Participating Cumulative Preferred Stock, par value $1.00 per
share, at a cash exercise price of $70 per unit, subject to
adjustment, upon the occurrence of certain events as are set forth
in the Rights Agreement. These events include the earliest to
occur of (i) acquisition of 15% or more of the outstanding shares
of common stock of the Company by any person or group (ii) the
commencement of a tender or exchange offer that would result upon
its consummation in a person or a group becoming the beneficial
owner of 15% or more of the outstanding common stock of the
Company or (iii) the determination by the Board of Directors that
any person is an "Adverse Person", as defined in the Rights
Agreement. The Rights are not exercisable until or following the
occurrence of one of the above events and will expire on December
14, 2004, unless previously redeemed or exchanged by the Company
as provided in the Rights Agreement.
<PAGE>11
SELECTED CONSOLIDATED FINANCIAL DATA
The following selected consolidated financial data for
the Company are derived from the financial statements that have
been audited and reported on by KPMG Peat Marwick LLP, independent
certified public accountants, and are qualified in their entirety
by reference to the more detailed consolidated financial
statements and the independent auditors' report thereon appearing
elsewhere in this Form 10-K. J. Baker has acquired a number of
specialty retail businesses in recent years. These acquisitions
affect the comparability of the financial information herein. For
further discussions of these acquisitions, see "DESCRIPTION OF
BUSINESS" and Notes 2, 3 and 5 to the Consolidated
FinancialStatements.
<TABLE>
J. BAKER, INC.
SELECTED CONSOLIDATED FINANCIAL DATA
(Dollars in thousands, except per share amounts)
Year Ended
--------------------------------------------------------
1/28/95 1/29/94 1/30/93 2/01/92 2/02/91
------- ------- ------- ------- -------
Income Statement Data:
<S> <C> <C> <C> <C> <C>
Net sales $1,042,979 $918,878 $532,256 $493,542 $421,442
Cost of sales 579,735 516,855 313,703 291,945 254,699
--------- ------- ------- ------- -------
Gross profit 463,244 402,023 218,553 201,597 166,743
Selling, administrative and
general expenses 389,362 336,283 174,658 165,711 134,049
Depreciation and amortization 27,883 21,874 14,688 12,709 11,114
-------- ------- ------- ------- -------
Operating income 45,999 43,866 29,207 23,177 21,580
Interest income 635 704 80 73 132
Interest expense (9,735) (8,146) (8,211) (10,352) (10,405)
-------- ------- -------- --------
Earnings before taxes
and extraordinary item 36,899 36,424 21,076 12,898 11,307
Taxes on earnings 13,283 13,113 7,798 4,874 3,916
-------- -------- -------- -------- -------
Earnings before
extraordinary item 23,616 23,311 13,278 8,024 7,391
Extraordinary item, net of
income tax benefit - - (2,444) - -
-------- -------- --------- -------- --------
Net earnings $23,616 $23,311 $10,834 $ 8,024 $ 7,391
======== ======== ========= ======== =======
Earnings per common share:
Primary:
Earnings before
extraordinary item $ 1.71 $ 1.70 $ 1.25 $ .78 $ .73
Extraordinary item - - (.23) - -
------- ------- ------- ------- -------
$ 1.71 $ 1.70 $ 1.02 $ .78 $ .73
======= ======= ======= ======= =======
Fully diluted:
Earnings before
extraordinary item $ 1.46 $ 1.45 $ 1.11 $ .78 $ .73
Extraordinary item - - (.18) - -
------- ------- ------- -------- ------
$ 1.46 $ 1.45 $ .93 $ .78 $ .73
======= ======= ======= ======== ======
</TABLE>
<TABLE>
<S> <C> <C> <C> <C> <C>
As At
------------------------------------------------------
1/28/95 1/29/94 1/30/93 2/01/92 2/02/91
Balance Sheet Data: ------- ------- ------- ------- -------
Working capital $236,124 $187,095 $138,385 $99,110 $109,582
Total assets 578,618 502,496 431,798 296,704 284,926
Long-term debt 204,518 154,665 95,864 79,515 97,544
Stockholders' equity 223,317 200,086 172,610 105,012 92,210
======= ======= ======= ======= =======
Cash dividends declared
per common share $ .06 $ .06 $ .06 $ .06 $ .06
====== ======= ======= ======= =======
</TABLE>
<PAGE>12
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS.
All references herein to fiscal 1995, fiscal 1994 and
fiscal 1993 relate to the years ended January 28, 1995, January
29, 1994 and January 30, 1993, respectively. To the extent that
the Company may have incurred increased costs resulting from
inflation, the Company believes that it has been able to offset
these costs through higher revenues. Accordingly, the Company
believes that inflation has had no significant impact on the
operations of the Company.
Results of Operations
Fiscal 1995 versus Fiscal 1994
In fiscal 1995, net sales increased by $124.1 million or
13.5% over net sales in fiscal 1994. Sales in the Company's
footwear operations increased by $83.4 million primarily as a
result of sales in the newly-acquired SCOA licensed shoe division,
coupled with an increase in the number of Parade of Shoes stores
in operation during fiscal 1995 versus fiscal 1994. The sales
increase in footwear operations was partially offset by a 3.0%
decrease in comparable retail footwear store sales (Comparable
retail footwear store 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), a decrease in
the number of discount licensed shoe departments and Fayva shoe
stores in operation during fiscal 1995 versus fiscal 1994 and a
$23.6 million decrease in wholesale footwear sales (which is a
result of the closing of 149 wholesale footwear departments during
the second quarter of fiscal 1995). Sales in the Company's
specialty apparel operations increased by $40.7 million as a
result of an increase in the number of Casual Male Big & Tall
stores and Work 'n Gear stores in operation at the end of fiscal
1995 over fiscal 1994, and a 3.5% increase in comparable specialty
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 55.6% of sales in fiscal 1995
as compared to 56.2% in fiscal 1994. This decrease was
attributable primarily to a relative increase in sales in
divisions which have lower costs of sales. Cost of sales in the
Company's footwear operations was 56.8% of sales in fiscal 1995 as
compared to 57.5% of sales in fiscal 1994. The decrease in such
percentage was primarily attributable to a lower cost of sales in
the newly acquired SCOA licensed shoe division as compared to the
Company's other shoe divisions, partially offset by higher
markdowns as a percentage of sales, and a lower initial markup on
merchandise purchases. Cost of sales in the Company's apparel
operations was 51.0% of sales in fiscal 1995 as compared to 51.3%
of sales in fiscal 1994. An increase in initial markup on
merchandise purchases in apparel operations was partially offset
by an increase in markdowns as a percentage of sales.
Selling, administrative and general expenses increased
$53.1 million or 15.8% over fiscal 1994, primarily due to the
newly acquired SCOA division and the increase in the number of
Parade of Shoes stores, Casual Male Big & Tall stores and Work 'n
Gear stores in operation during fiscal 1995 versus fiscal 1994.
As a percentage of sales, selling, administrative and general
expenses were 37.3% in fiscal 1995 as compared to 36.6% in fiscal
1994. This increase was due primarily to the relative decrease in
sales in the licensed discount shoe division as compared to the
other shoe divisions, the increase in sales in specialty apparel
and shoe stores and the decrease in wholesale footwear sales,
which have lower selling, administrative and general expenses than
retail sales. Selling, administrative and general expenses in
the Company's footwear operations were 37.2% as compared to 36.6%
of sales in fiscal 1994 primarily as a result of a change in the
relative mix of sales (the Company's licensed discount and
wholesale shoe divisions have lower selling, administrative and
general expenses as compared to those in the Company's other
footwear divisions). Selling, administrative and general expenses
in the Company's apparel operations were 37.9% of sales in fiscal
1995 as compared to 36.6% of sales in fiscal 1994, primarily due
to an increase in store level expenses.
Depreciation and amortization expense increased by $6.0
million in fiscal 1995 over 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 4.9% to $46.0 million from $43.9
million in fiscal 1994. As a percentage of sales, operating
income was 4.4% in fiscal 1995 as compared to 4.8% in fiscal 1994.
<PAGE>13
Net interest expense was $9.1 million in fiscal 1995 as
compared to $7.4 million in fiscal 1994, primarily due to higher
average levels of borrowings and higher interest rates on
borrowings in fiscal 1995 as compared to fiscal 1994.
Taxes on earnings for fiscal 1995 were $13.3 million,
yielding an effective tax rate of 36.0%, as compared to taxes of
$13.1 million, yielding an effective rate of 36.0% in fiscal 1994.
Net earnings for fiscal 1995 were $23.6 million as
compared to net earnings of $23.3 million in fiscal 1994, an
increase of 1.3%.
Fiscal 1994 versus Fiscal 1993
In fiscal 1994, net sales increased by $386.6 million or
72.6% over net sales in fiscal 1993. This increase was primarily
attributable to the acquisition of Morse Shoe, Inc. on January 30,
1993, which included the addition of 493 licensed shoe departments
(501 at January 29, 1994) and 425 Fayva shoe stores (395 at
January 29, 1994), and the acquisition of Shoe Corporation of
America, Inc. on November 19, 1993, which included the addition of
158 licensed departments (188 at January 29, 1994). Fiscal 1994
sales in the Morse and SCOA footwear operations were $352.5
million and $10.0 million, respectively. Sales in the remainder
of the Company's footwear operations decreased by $7.8 million as
a result of a decrease in the average number of retail locations
operated during the period, partially offset by an increase in
wholesale footwear sales and a 0.1% increase in comparable retail
footwear store sales. Sales in the Company's specialty apparel
operations increased by $32.0 million as a result of an increase
of 54 in the number of Casual Male Big & Tall stores and Work 'n
Gear stores in operation at the end of fiscal 1994 over fiscal
1993, and a 3.8% increase in comparable specialty apparel store
sales.
Cost of sales constituted 56.2% of sales in fiscal 1994
as compared to 58.9% in fiscal 1993. This decrease was
attributable primarily to a relative increase in sales in
divisions which have lower costs of sales. Cost of sales in the
Company's footwear operations was 57.5% of sales in fiscal 1994 as
compared to 61.7% of sales in fiscal 1993. The decrease in such
percentage was primarily attributable to a lower cost of sales in
the newly acquired Fayva shoe store division as compared to the
Company's other shoe divisions, coupled with an increase in
initial markup on merchandise purchases and a decrease in
markdowns as a percentage of sales. Cost of sales in the
Company's apparel operations was 51.3% of sales in fiscal 1994 as
compared to 52.1% of sales in fiscal 1993. An increase in
markdowns as a percentage of sales in apparel operations was
offset by an increase in initial markup on merchandise purchases.
Selling, administrative and general expenses increased
$161.6 million or 92.5% over fiscal 1993, primarily as a result of
the acquisition of Morse Shoe, Inc. on January 30, 1993. As a
percentage of sales, selling, administrative and general expenses
were 36.6% in fiscal 1994 as compared to 32.8% in fiscal 1993.
This percentage increase was primarily due to a relative increase
in sales in apparel and shoe stores, which have higher selling,
administrative and general expenses as compared to licensed shoe
department and wholesale sales. Selling, administrative and
general expenses in the Company's footwear operations were 36.6%
as compared to 32.1% of sales in fiscal 1993. The increase in
such percentage was primarily due to a relative increase in sales
in the Company's shoe stores (primarily from the newly acquired
Fayva shoe store division) versus sales in the Company's
licensed/wholesale departments. Selling, administrative and
general expenses in the Company's apparel operations were 36.6% of
sales in fiscal 1994 as compared to 34.5% of sales in fiscal 1993.
The increase in such percentage is primarily due to an increase in
store level expenses. In the above analyses of selling,
administrative and general expenses in the Company's footwear and
apparel operations, fiscal 1993 percentage to sales figures in
each of the footwear and apparel segments were restated to
allocate corporate overhead consistent with the allocation method
used in fiscal 1994.
Depreciation and amortization expense increased by $7.2
million in fiscal 1994 over fiscal 1993 due to an increase in
depreciable and amortizable assets.
As a result of the above described effects, the Company's
operating income increased 50.2% to $43.9 million from $29.2
million in fiscal 1993. As a percentage of sales, operating
income was 4.8% in fiscal 1994 as compared to 5.5% in fiscal 1993.
Net interest expense was $7.4 million in fiscal 1994 as
compared to $8.1 million in fiscal 1993. The Company had higher
average levels of borrowings in fiscal 1994 as compared to fiscal
1993. The interest expense attributable to the higher levels of
borrowings was offset by lower interest rates on the borrowings
and higher interest income, principally earned on the $8.7
million, 6.0% note receivable due from Ames, which was issued in
December, 1992.
<PAGE>14
Taxes on earnings for fiscal 1994 were $13.1 million,
yielding an effective tax rate of 36.0%, as compared to taxes on
earnings before extraordinary item of $7.8 million, yielding an
effective rate of 37.0% in fiscal 1993.
Net earnings for fiscal 1994 were $23.3 million as
compared to earnings before extraordinary item of $13.3 million in
fiscal 1993, an increase of 75.6%.
Financial Condition
January 28, 1995 versus January 29, 1994
Accounts receivable at January 28, 1995 decreased from
the balance at January 29, 1994 primarily due to the elimination
of the Company's wholesale accounts receivable, partially offset
by an increase in the number of units operated in January, 1995 as
compared to January, 1994 in the Company's licensed shoe divisions
coupled with the inclusion of $2.9 million in current portion of
notes receivable in accounts receivable at January 28, 1995.
There was no corresponding current portion of notes receivable in
accounts receivable at January 29, 1994.
Merchandise inventories at January 28, 1995 were higher
than at January 29, 1994 primarily due to an increase in the
number of licensed shoe departments operated in the SCOA licensed
footwear division at the end of fiscal 1995 versus the end of
fiscal 1994. The increase is also due to an increase in the
number of Parade of Shoes, Casual Male Big & Tall and Work 'n Gear
locations in operation at the end of fiscal 1995 as compared to
fiscal 1994, partially offset by a decrease in the number of
licensed discount departments and Fayva stores in operation during
the period.
The increase in property, plant and equipment is the
result of the Company incurring capital expenditures of
approximately $44.5 million in fiscal 1995, primarily for the
opening of new licensed department and store locations and the
renovation of existing Fayva stores and licensed departments.
The ratio of accounts payable to merchandise inventory
was 36.2% and 38.9% at January 28, 1995 and January 29, 1994,
respectively. This decrease is primarily a result of the
Company's decision to reduce the average financing terms of its
foreign purchases.
Accrued expenses at January 28, 1995 decreased from the
balance at January 29, 1994 primarily due to payment of accruals
set up for Morse acquisition related costs and expenses.
Other liabilities at January 28, 1995 decreased from the
balance at January 29, 1994 primarily due to payment of accruals
set up for Morse acquisition related costs and expenses.
Debt at January 28, 1995 increased to $204.5 million from
$154.7 million at January 29, 1994, primarily due to additional
borrowings under the Company's revolving line of credit to meet
seasonal and new licensed department and retail store working
capital needs and to fund capital expenditures.
Liquidity and Capital Resources
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 Bank
of Massachusetts, Natwest Bank, N.A., The Yasuda Trust and Banking
Company, LTD., Fuji Bank, Limited and Standard Chartered Bank (the
"Banks"). As amended to date, the aggregate commitment amount
under this revolving credit facility will be reduced by $10
million on each December 30th of 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 January 28, 1995, the Company had
outstanding obligations under the revolving credit facility of
$197.1 million, consisting of loans, obligations under bankers'
acceptances and letters of credit.
On August 23, 1994, the Company paid in full its Series
C Trade Notes in the amount of $2.6 million. Concurrent with the
redemption of the Series C Trade Notes, $3.5 million previously
held in trust for the benefit of Trade Note holders was released
to the Company by the Trade Note trustee.
In June, 1992 the Company issued $70 million of 7%
convertible subordinated notes due 2002. The notes are
convertible at a conversion price of $16.125 per share, subject to
adjustment in certain events. The Company used the net proceeds
to repay all of the $20 million outstanding principal amount of
its 10.53% senior term notes, $27.5 million principal amount of
its 11.21% senior subordinated notes, and a portion of outstanding
bank indebtedness under its
<PAGE>15
unsecured revolving credit facility. In connection with repayment
of the senior term notes and senior subordinated notes, the
Company paid redemption premiums totalling approximately $2.0
million.
The Company expects to open approximately 75 Casual Male
Big & Tall stores and approximately 20 stores in the aggregate in
the Company's Parade of Shoes, Work 'n Gear and Fayva divisions in
fiscal 1996.
The Company believes that amounts available under its
revolving credit facility, along with internally generated funds,
will be sufficient to meet its current operating and capital
requirements under ordinary circumstances through the end of the
current fiscal year.
<PAGE>16
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
<TABLE>
J. BAKER, INC. AND SUBSIDIARIES
Index to Consolidated Financial Statements
<S> <C>
Consolidated Financial Statements: PAGE
Independent Auditors' Report 17
Consolidated balance sheets as of January 28, 1995 18
and January 29, 1994
Consolidated statements of earnings for the years 19
ended January 28, 1995, January 29, 1994 and January 30, 1993
Consolidated statements of stockholders' equity for 20
the years ended January 28, 1995, January 29, 1994 and
January 30, 1993
Consolidated statements of cash flows for the years 21
ended January 28, 1995, January 29, 1994 and January 30, 1993
Notes to consolidated financial statements 22
</TABLE>
All schedules have been omitted as they are inapplicable or not
required, or the information has been included in the consolidated
financial statements or in the notes thereto.
<PAGE>17
Independent Auditors' Report
The Board of Directors and Stockholders
J. Baker, Inc.:
We have audited the accompanying consolidated balance sheets of J.
Baker, Inc. and subsidiaries as of January 28, 1995 and January
29, 1994, and the related consolidated statements of earnings,
stockholders' equity and cash flows for each of the years in the
three-year period ended January 28, 1995. These consolidated
financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these
consolidated financial statements based on our audits.
We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the
amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating
the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to
above present fairly, in all material respects, the financial
position of J. Baker, Inc. and subsidiaries as of January 28, 1995
and January 29, 1994, and the results of their operations and
their cash flows for each of the years in the three-year period
ended January 28, 1995 in conformity with generally accepted
accounting principles.
/s/ KPMG Peat Marwick LLP
___________________________
KPMG Peat Marwick LLP
Boston, Massachusetts
March 10, 1995
<PAGE>18
<TABLE>
J. BAKER, INC. AND SUBSIDIARIES
Consolidated Balance Sheets
January 28, 1995 and January 29, 1994
<CAPTION>
Assets 1995 1994
------ ---- ----
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 4,915,491 $ 3,584,032
Accounts receivable:
Trade 21,549,133 27,984,534
Other 4,000,371 3,919,156
----------- ------------
25,549,504 31,903,690
----------- ------------
Merchandise inventories 333,686,950 278,220,413
Prepaid expenses 8,121,922 6,672,008
Deferred income taxes 2,120,000 1,664,475
----------- -----------
Total current assets 374,393,867 322,044,618
----------- -----------
Property, plant and equipment, at cost:
Land and buildings 24,988,513 24,114,820
Furniture, fixtures and equipment 116,900,087 87,993,608
Leasehold improvements 47,448,521 32,715,145
----------- -----------
189,337,121 144,823,573
Less accumulated depreciation
and amortization 58,271,956 39,256,180
----------- -----------
Net property, plant
and equipment 131,065,165 105,567,393
----------- -----------
Deferred income taxes - 1,210,000
Other assets, at cost, less
accumulated amortization 73,159,234 73,674,470
----------- -----------
$578,618,266 $502,496,481
============ ============
Liabilities and Stockholders' Equity
Current liabilities:
Current portion of long-term debt $ 1,500,000 $ 2,636,300
Accounts payable 120,792,457 108,262,923
Accrued expenses 15,504,950 24,050,766
Income taxes payable 472,357 -
----------- -----------
Total current liabilities 138,269,764 134,949,989
----------- -----------
Deferred income taxes 6,136,000 -
Other liabilities 6,377,762 12,794,652
Long-term debt, net of current portion 128,300,000 77,000,000
Senior subordinated debt 5,864,835 7,312,366
Convertible subordinated debt 70,353,000 70,353,000
Stockholders' equity:
Common stock, par value $.50 per share,
authorized 40,000,000 shares, 13,840,647
shares issued and outstanding in 1995
(13,792,647 in 1994) 6,920,324 6,896,324
Preferred stock, par value $1.00 per share,
authorized 2,000,000 shares (none issued
and outstanding) - -
Series A junior participating cumulative
preferred stock, par value $1.00 per
share, authorized 100,000 shares
(none issued and outstanding) - -
Additional paid-in capital 115,074,822 114,654,417
Retained earnings 101,321,759 78,535,733
----------- -----------
Total stockholders' equity 223,316,905 200,086,474
----------- -----------
$578,618,266 $502,496,481
============ ===========
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>19
J. BAKER, INC. AND SUBSIDIARIES
Consolidated Statements of Earnings
For the years ended January 28, 1995, January 29, 1994 and
January 30, 1993
<TABLE>
1995 1994 1993
----- ---- ----
<S> <C> <C> <C>
Net sales $1,042,978,875 $918,877,733 $532,255,720
Cost of sales 579,734,911 516,854,748 313,703,053
----------- ----------- -----------
Gross profit 463,243,964 402,022,985 218,552,667
Selling, administrative
and general expenses 389,362,380 336,283,342 174,658,273
Depreciation and amortization 27,882,778 21,873,610 14,687,737
---------- ----------- -----------
Operating income 45,998,806 43,866,033 29,206,657
Interest income 635,574 703,778 80,291
Interest expense (9,735,209) (8,145,769) (8,211,336)
---------- ---------- ----------
Earnings before taxes and
extraordinary item 36,899,171 36,424,042 21,075,612
Taxes on earnings 13,283,000 13,113,000 7,798,000
---------- ---------- ----------
Earnings before extraordinary
item 23,616,171 23,311,042 13,277,612
Extraordinary item, net of
income tax benefit - - (2,443,953)
---------- ----------- -----------
Net earnings $23,616,171 $23,311,042 $10,833,659
========== ========== ==========
Earnings per common share:
Primary:
Earnings before extraordinary item $ 1.71 $ 1.70 $ 1.25
Extraordinary item - - (.23)
_______ _______ ______
$ 1.71 $ 1.70 $ 1.02
======= ======= ======
Fully diluted:
Earnings before extraordinary item $ 1.46 $ 1.45 $ 1.11
Extraordinary item - - (.18)
______ ______ ______
$ 1.46 $ 1.45 $ .93
====== ====== ======
Number of shares used to compute
earnings per common share:
Primary 13,831,552 13,674,553 10,655,498
========== ========== ==========
Fully diluted 18,363,042 18,286,267 13,774,071
========== ========== ==========
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>20
J. BAKER, INC. AND SUBSIDIARIES
Consolidated Statements of Stockholders' Equity
For the years ended January 28, 1995, January 29, 1994 and
January 30, 1993
<TABLE>
<S> <C> <C> <C> <C> <C>
Additional Total
Common Stock Paid-in Retained Stockholders'
Shares Amount Capital Earnings Equity
------- ------ ---------- --------- -------------
Balance, February 1, 1992 10,626,073 $5,313,037 $53,847,129 $45,852,267 $105,012,433
Net income for the year ended
January 30, 1993 - - - 10,833,659 10,833,659
Shares issued in connection
with acquistion of
Morse Shoe, Inc. 2,767,377 1,383,688 55,458,236 - 56,841,924
Exercise of stock options 80,823 40,412 522,821 - 563,233
Retirement of stock (108) (54) (1,025) - (1,079)
Dividends paid($.06 per share) - - - (639,855) (639,855)
---------- --------- ---------- ----------- ----------
Balance, January 30, 1993 13,474,165 6,737,083 109,827,161 56,046,071 172,610,315
---------- --------- ----------- ----------- -----------
Net income for the year ended
January 29, 1994 - - - 23,311,042 23,311,042
Shares issued in connection
with acquistion of Shoe
Corporation of America, Inc. 51,428 25,714 944,990 - 970,704
Exercise of stock options 129,232 64,616 1,089,955 - 1,154,571
Shares purchased by former
Casual Male stockholders 88,044 44,022 1,793,922 - 1,837,944
Conversion of convertible debt 49,820 24,910 998,392 - 1,023,302
Retirement of stock (42) (21) (3) - (24)
Dividends paid ($.06 per share) - - - (821,380) (821,380)
---------- --------- ---------- ---------- ----------
Balance, January 29, 1994 13,792,647 6,896,324 114,654,417 78,535,733 200,086,474
---------- --------- ----------- ---------- -----------
Net income for the year ended
January 28, 1995 - - - 23,616,171 23,616,171
Exercise of stock options 48,000 24,000 420,405 - 444,405
Dividends paid ($.06 per share) - - - (830,145) (830,145)
--------- --------- ---------- ---------- ----------
Balance, January 28, 1995 13,840,647 $6,920,324 $115,074,822 $101,321,759 $223,316,905
========== ========== ============ ============ ============
</TABLE>
See accompanying notes to consolidated financial statements
<PAGE>21
J. BAKER, INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows
For the years ended January 28, 1995, January 29, 1994
and January 30, 1993
<TABLE>
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
Cash flows from operating activities:
Net earnings $23,616,171 $23,311,042 $10,833,659
Adjustments to reconcile net earnings
to net cash provided by (used in)
operating activities:
Depreciation and amortization:
Fixed assets 19,015,776 14,161,472 9,363,699
Deferred charges, intangible
assets and deferred
financing costs 8,922,497 7,758,674 5,365,311
Deferred income taxes 7,955,364 9,886,000 581,634
Write-down of other assets - - 3,470,355
Extraordinary item not
utilizing cash - - 1,734,953
Change in:
Accounts receivable 8,466,255 (427,878) 685,966
Merchandise
inventories (56,854,448) (52,930,182) (8,162,842)
Prepaid expenses (1,449,914) (2,109,595) (489,190)
Accounts payable 12,529,534 (5,463,796) 5,313,770
Accrued expenses (9,986,666) (12,878,976) 250,119
Income taxes payable 1,165,288 (1,796,559) 1,235,562
Other liabilities (7,267,692) (7,451,093) (44,369)
---------- ----------- ----------
Net cash provided by (used in)
operating activities 6,112,165 (27,940,891) 30,138,627
---------- ----------- ----------
Cash flows from investing activities:
Capital expenditures for:
Property, plant and equipment (44,513,548) (24,115,405) (11,197,966)
Other assets (12,000,475) (2,480,695) (7,782,742)
Net cash paid in acquisition of
Shoe Corp. of America - (2,698,507) -
Net cash paid in acquisition of
Casual Male - - (300,000)
Additional amount paid in connection with
acquisition of Work 'n Gear stores - - (230,987)
Net cash acquired in acquisition of
Morse Shoe, Inc. - - 1,596,487
----------- ----------- -----------
Net cash used in
investing activities (56,514,023) (29,294,607) (17,915,208)
----------- ----------- -----------
Cash flows from financing activities:
Proceeds from issuance of convertible
subordinated debt - - 70,000,000
Repayment of senior debt (2,636,300) - (25,000,000)
Repayment of senior
subordinated debt - - (27,500,000)
Proceeds from (repayment of)
other long term debt 51,300,000 52,262,950 (25,800,000)
Release of restricted cash 3,455,357 - -
Proceeds from issuance of common
stock, net of retirements 444,405 2,992,493 562,154
Payment of dividends (830,145) (821,380) (639,855)
---------- ----------- ----------
Net cash provided by (used in)
financing activities 51,733,317 54,434,063 (8,377,701)
---------- ---------- ----------
Net increase (decrease) in cash
and cash equivalents 1,331,459 (2,801,435) 3,845,718
Cash and cash equivalents at
beginning of year 3,584,032 6,385,467 2,539,749
----------- ----------- -----------
Cash and cash equivalents at
end of year $ 4,915,491 $ 3,584,032 $ 6,385,467
=========== =========== ===========
</TABLE>
See accompanying notes to consolidated financial statements
<PAGE>22
J. BAKER, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
January 28, 1995, January 29, 1994 and January 30, 1993
(1) Summary of Significant Accounting Policies
------------------------------------------
Basis of Consolidation
The consolidated financial statements include the accounts
of the Company and its wholly owned subsidiaries. All significant
intercompany accounts and transactions have been eliminated in
consolidation.
Fiscal Year
The Company follows a 52 - 53 week fiscal year ending on
the Saturday nearest January 31.
Fair Value of Financial Instruments
The carrying amount of cash, cash equivalents, trade
receivables and trade payables approximate fair value because of
the short maturity of these financial instruments. The fair value
of the Company's long-term instruments is estimated based on
market values for similar instruments. At January 28, 1995, the
difference between the carrying value of long-term instruments and
their estimated fair value is not material.
Cash and Cash Equivalents
Cash equivalents consist of highly liquid instruments with
maturities of three months or less and are stated at cost which
approximates market. The Company's cash management program
utilizes zero balance accounts. Accordingly, all book overdraft
balances have been reclassified to accounts payable.
Merchandise Inventories
Merchandise inventories, which consist entirely of finished
goods, are valued at the lower of cost or market, principally by
the retail inventory method.
Depreciation and Amortization of Property, Plant and
Equipment
Depreciation and amortization of the Company's property,
plant and equipment are provided on the straight-line method over
the following periods:
Furniture and fixtures 7 years
Machinery and equipment 7 years
Leasehold improvements 10 years
Building, building improvements
and land improvements 40 years
Maintenance and repairs are charged to expense as incurred.
Major renewals or replacements are capitalized. When properties
are retired or otherwise disposed of, the asset and related
reserve account are relieved and the resulting gain or loss, if
any, is credited or charged to earnings.
Earnings Per Common Share
Earnings per common share of the Company is based on the
weighted average number of shares of common stock outstanding
during the applicable period. 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 for the periods ended
January 28, 1995, January 29, 1994 and January 30, 1993 is based
on the weighted average number of shares of common stock
outstanding during such periods. Included in this calculation is
the dilutive effect of common stock issuable under the 7%
convertible subordinated notes due 2002, stock options and
warrants.
Revenue Recognition
The Company recognizes revenue at the time of sale in its
retail stores and at the time of shipment in its wholesale
division.
<PAGE>23
Income Taxes
Deferred taxes are provided for using the asset and
liability method for temporary differences between financial and
tax reporting.
(2) Acquisition of Shoe Corporation of America, Inc.
------------------------------------------------
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
(the "TEI Contingent Payment"), 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").
The acquisition was accounted for under the purchase method
of accounting and, accordingly, the results of operations of SCOA
are included in the consolidated statements of earnings since the
date of acquisition. The purchase price of $3,822,000, which
includes $500,000 of direct costs associated with the Merger, was
allocated to the assets and liabilities of SCOA based on their
respective fair values at November 19, 1993.
During the current fiscal year, the excess of cost over net
assets acquired has been adjusted by $970,000, the amount accrued
during the year ended January 28, 1995 for the TEI Contingent
Payment right. In addition, the Company completed its analysis of
the allocation of the purchase price and adjusted downward the
preliminary estimate of the fair value of the acquired net assets
by $1,764,000 as follows:
<TABLE>
<S> <C>
Adjustments to reflect fair value of net assets:
Merchandise inventories $(2,282,000)
Deferred income taxes 1,065,000
Accrued expenses (547,000)
----------
$(1,764,000)
===========
</TABLE>
As a result, the increase in the excess of cost over net
assets acquired is included in Other Assets and is being amortized
on a straight-line basis over twenty years.
SCOA operated 448 and 162 licensed footwear departments at
January 28, 1995 and January 29, 1994, respectively. The increase
in the number of licensed departments was primarily a result of
the acquisition of new accounts.
(3) Acquisition of Morse Shoe, Inc.
-------------------------------
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 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 stock-
<PAGE>24
holders, 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. Since January 30, 1993,
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.
The acquisition was accounted for under the purchase method
of accounting and, accordingly, the results of operations are
included in the consolidated statements of earnings since the date
of acquisition. At January 30, 1993, the purchase price of
$58,942,000, which includes $2,100,000 of direct costs associated
with the acquisition, was allocated to the assets and liabilities
of Morse based on their respective fair values. During the year
ended January 29, 1994, the Company completed its analysis of the
allocation of the purchase price and adjusted downward the
preliminary estimate of the fair value of the acquired net assets
by $6,500,000 as follows:
<TABLE>
<S> <C>
Adjustments to reflect fair value of net assets:
Merchandise inventories $(9,309,000)
Accrued expenses (4,300,000)
Deferred income taxes 4,220,000
Other assets 2,389,000
Other liabilities 500,000
----------
$(6,500,000)
==========
</TABLE>
As a result, the excess of cost over net assets acquired is
included in Other Assets and is being amortized on a straight line
basis over twenty years.
Morse has filed a breach of contract lawsuit against a
former wholesale customer. There can be no assurance of what
amount the Company will realize as a result of this lawsuit.
The following unaudited pro forma operating results assume
the Morse acquisition occurred as of the beginning of the year
ended January 30, 1993, after giving effect to certain pro forma
adjustments. In addition, for comparability purposes, the pro
forma operating results for the year ended January 30, 1993
excludes Morse's reorganization costs.
<TABLE>
<S> <C>
Net sales $894,723,000
Operating income 42,031,000
Earnings before extraordinary item 19,852,000
Net earnings 17,408,000
Earnings per common share:
Primary:
Earnings before extraordinary item $1.48
Net earnings $1.30
Fully diluted:
Earnings before extraordinary item $1.32
Net earnings $1.17
</TABLE>
The pro forma results have been prepared for comparative
purposes only and do not purport to be indicative of the results
of operations which actually would have resulted had the
combination been in effect on the date indicated, or which may
result in the future.
<PAGE>25
(4) Bankruptcy Filings of Licensors
-------------------------------
On April 26, 1990, Ames Department Stores, Inc., and
related entities ("Ames"), a significant licensor of the Company
(see Notes 6 and 13), filed for protection under Chapter 11 of the
United States Bankruptcy Code. On December 18, 1992, the Company
and Ames executed Amendment No. 2 to the Ames license agreement
and the Company and Ames executed a certain Stipulation which was
filed with the United States Bankruptcy Court for the Southern
District of New York and approved on January 6, 1993, the
consummation date of Ames' Plan of Reorganization. The
Stipulation provided that the license agreement between Ames and
the Company shall be modified and amended and the license
agreement assumed by Ames. Further, pursuant to the Stipulation,
the Company settled its $13.7 million pre-petition claim with Ames
and, in return, the Company received $5 million in cash and a
promissory note issued by Ames in the amount of $8.7 million
bearing interest at the rate of 6.0% per annum and having a final
maturity on December 1, 1997, subject to repayment in the amounts
and on the dates set forth in such promissory note. The
Stipulation further provided for a mortgage lien on and security
interest in the real property and buildings in Rocky Hill,
Connecticut comprising the executive offices of Ames, which
mortgage lien and security interest shall be used as security in
repayment of the promissory note, and which shall be senior to all
other liens and security interests except those granted in favor
of certain banks under a credit agreement with such banks.
Carried on the balance sheet at January 28, 1995 in Other
Assets (see Note 6) are deferred lease acquisition costs of $20.8
million attributable to the Ames license agreement, which expires
in 2009, subject to earlier termination upon failure to meet
certain operating requirements. This balance reflects a non-cash
write-down during the third quarter of fiscal 1993 resulting in a
pre-tax charge to earnings of approximately $3.5 million as a
result of Ames' October 30, 1992 announcement to close 60
additional stores. The Company intends to continue to amortize
the deferred lease acquisition costs of the Ames license agreement
over the remaining term of the license agreement, since the
Company believes, based on its assessment of the likelihood and
level of ongoing business with Ames, that the value of the license
agreement supports the historical carrying cost at January 28,
1995. Any closing by Ames of additional stores will likely reduce
the value of the Ames license agreement to a level below the
current carrying value of the deferred lease acquisition costs.
This would result in a further non-cash write-down of the asset,
which would be reflected in the Company's earnings. The amount of
the write-down would depend on the Company's historical sales
volume in the closed stores.
On July 8, 1993, July 19, 1993 and September 6, 1993
Fishers Big Wheel, Inc. ("Fishers", a former licensor of the
Company), 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. 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 has filed proofs of claim to preserve its rights to
recover its pre-petition arrearage.
On August 29, 1994, Jamesway filed its First Amended Plan
of Reorganization and on December 12, 1994, its Second Amended
Plan of Reorganization was confirmed by the Bankruptcy Court. On
January 18, 1995, the Jamesway Plan was consummated and Jamesway
emerged from bankruptcy, assumed the Company's license agreement
and, on February 1, 1995, paid the Company its pre-petition
arrearage.
On August 1, 1994, Rose's filed its Plan of Reorganization
which Plan was confirmed on December 14, 1994. Rose's anticipates
consummation of its plan and emergence from bankruptcy on or about
April 30, 1995. On December 5, 1994, the Bankruptcy Court
approved a joint motion filed by the Company and Rose's to assume
the Company's license agreement with Rose's and to cure all pre-
petition arrearage owed to the Company. The Company expects to
collect its pre-petition arrearage by January, 1996.
At January 28, 1995, carried on the balance sheet in Other
Assets are deferred lease acquisition costs of $2.2 million
attributable to the Rose's license agreement. The Company intends
to continue to amortize the
<PAGE>26
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 January
28, 1995.
During fiscal 1995, Jamesway and Rose's closed 115 stores.
The Company does not expect these filings under the Bankruptcy
proceedings, or the aforementioned store closings, to have a
material adverse effect on future earnings. Combined sales in
Jamesway and Rose's totaled $60.9 million for the year ended
January 28, 1995. Sales in Fishers for the year ended January 28,
1995 were $1.6 million.
(5) Acquisitions of Apparel Businesses
----------------------------------
The Casual Male
On February 2, 1991, the Company acquired Casual Male
pursuant to Casual Male's Plan of Reorganization under Chapter 11
of the United States Bankruptcy Code. Former Casual Male
stockholders who elected to receive a contingent payment right in
lieu of $.25 per common share, up to a maximum of $1,000 per
stockholder, were entitled to receive a percentage of the net
earnings of Casual Male for the seven year period ending January
30, 1998, with a maximum aggregate payment of $5.0 million (the
"Contingent Payment"). On April 12, 1993 the Contingent Payment
Agreement was amended to provide that participants in the
Contingent Payment would instead receive an aggregate of $2.4
million immediately in satisfaction of the obligation of the
Company to make the Contingent Payment. The excess of net assets
over the cost of the acquired business has been reduced by the
$2.4 million Contingent Payment, and the balance is being
amortized on a straight line basis over fifteen years.
Work 'n Gear Stores
On September 25, 1991, the Company purchased from WearGuard
Corporation approximately $5.3 million in assets for 415,723
shares of the Company's common stock. During the fiscal year
ended January 30, 1993, pursuant to the terms of the transaction,
the Company was required to pay additional cash consideration of
$230,987 to WearGuard Corporation as the amount by which the
average price at which WearGuard Corporation sold its acquired
shares during a 90 day period ended February 25, 1992 was less
than $12.64 per share. The acquired assets consisted primarily of
the inventory and fixed assets of WearGuard's then existing 29
retail stores. The Company also assumed the leases to the 29
retail stores.
(6) Other Assets
-------------
Other assets at January 28, 1995 and January 29, 1994 were
comprised of:
<TABLE>
<S> <C> <C>
1995 1994
---- ----
Deferred lease acquisition costs $49,777,441 $42,976,198
Systems development costs 22,584,847 20,847,605
Notes receivable 9,641,000 9,546,000
Excess of costs over net assets
acquired 10,191,899 7,457,561
Restricted cash - 3,455,357
Leasehold interests 1,255,000 1,255,000
Cash surrender value of officers'
life insurance, net 474,128 474,128
Other intangible assets and deferred
charges 12,252,483 8,790,493
----------- ----------
106,176,798 94,802,342
Less current portion of notes
receivable 2,900,000 -
Less accumulated amortization 30,117,564 21,127,872
----------- ----------
$73,159,234 $73,674,470
=========== ===========
</TABLE>
Deferred lease acquisition costs consist primarily of
payments made in connection with the acquisition of license
agreements and are being amortized over the terms of the
respective license agreements (see Note 4). Systems development
costs are being amortized on a straight line basis over eight
years. Notes receivable consist of an $8.7 million, 6.0% note from
Ames maturing on December 1, 1997 (see Note 4), and a $941,000,
10.25% note from Hills Department Store Company ("Hills") maturing
on September 30, 2003.
<PAGE>27
The excess of costs over net assets acquired is the result
of the acquisitions of Morse (see Note 3) and SCOA (see Note 2)
and is being amortized over twenty years. Restricted cash
represented amounts held in a trust account for the benefit of
current and future Trade Note holders (see Note 7). The leasehold
interests are being amortized over the terms of the related
leases. Other intangible assets and deferred charges consist
primarily of costs incurred for store openings and the issuance of
debt and are being amortized over periods of three to ten years.
During fiscal 1993, the Company released rights of software
technology which the Company had previously developed for use in
its operations, reducing selling, administrative and general
expenses by $3.5 million.
(7) Debt
----
Long-Term Debt
Long-term debt at January 28, 1995 and January 29, 1994 was
comprised of:
<TABLE>
<S> <C> <C>
1995 1994
---- ----
Loans under revolving credit facility $128,300,000 $77,000,000
Trade notes - 2,636,300
----------- ----------
128,300,000 79,636,300
Less current portion - 2,636,300
----------- ----------
$128,300,000 $77,000,000
============ ===========
</TABLE>
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 Bank
of Massachusetts, Natwest Bank, N.A., Fuji Bank, Ltd., The Yasuda
Trust and Banking Company, LTD. and Standard Chartered Bank (the
"Banks"). As amended to date, the aggregate commitment amount
under this revolving credit facility will be reduced by $10
million on each December 30th of 1995 and 1996. Borrowings under
the revolving credit facility can, at the discretion of the
Company, be in the form of any combination of loans, bankers'
acceptances and letters of credit. Loans under the revolving
credit facility bear interest, at the Company's discretion, at
Shawmut Bank, N.A.'s corporate base rate (8.5% at January 28,
1995) or at the London Interbank Offered Rate (LIBOR) plus one and
one-half percent.
This facility expires in June, 1997. At January 28, 1995,
the Company had $52.9 million available for borrowing under this
facility.
The trade notes represented Series C Trade Notes issued by
Morse to unsecured pre-petition trade creditors of Morse. On
August 23, 1994, the Company paid in full its Series C Trade
Notes. Concurrent with the redemption of the Series C Trade
Notes, $3.5 million previously held in trust for the benefit of
Trade Note holders was released to the Company by the Trade Note
trustee.
Senior Subordinated Debt
In June 1989, the Company issued $35 million of senior
subordinated notes with detachable warrants which enable the
holders to purchase 600,000 shares of the Company's common stock
at a price of $20 per share, subject to adjustments. At January
28, 1995, the detachable warrants enable holders to purchase
approximately 640,000 shares at $18.80 per share. Subject to
certain conditions, the Company may repurchase all, but not
less than all, of the outstanding warrants for 150% of the then
per share warrant exercise price. The senior subordinated notes
of $7,364,835 at January 28, 1995 ($7,312,366 at January 29, 1994)
are presented net of $135,165 ($187,634 at January 29, 1994),
which reflects the unaccreted portion of the $1,710,000 value
originally assigned to the detachable warrants. The value of the
warrants was recorded as additional paid-in capital and is being
accreted using the effective interest method.
The senior subordinated debt was reduced by $27.5 million
in June 1992 with proceeds from the $70 million 7% convertible
subordinated notes referred to below. The senior subordinated
notes are due in installments of $1.5 million per year beginning
in May 1995 with a final payment in May 1999. Interest, at
11.21%, is payable semiannually.
<PAGE>28
Convertible Subordinated Debt
Convertible subordinated debt at January 28, 1995 and
January 29, 1994 was comprised of:
<TABLE>
1995 1994
---- ----
<S> <C> <C>
7% convertible subordinated notes $70,000,000 $70,000,000
Convertible debentures 353,000 353,000
---------- ----------
$70,353,000 $70,353,000
========== ==========
</TABLE>
In June 1992, the Company issued $70 million of 7%
convertible subordinated notes due 2002. The notes are
convertible into common stock at a conversion price of $16.125 per
share, subject to adjustment in certain events. The Company used
the net proceeds to repay all of the $20 million outstanding
principal amount of its senior term notes, $27.5 million principal
amount of its senior subordinated notes, and a portion of
outstanding bank indebtedness under its unsecured revolving credit
facility. As a result of the early payment of the senior notes
and the senior subordinated notes, the Company had an
extraordinary charge against earnings of $2,444,000, net of income
tax benefits of $1,262,000, in the fiscal year ended January 30,
1993. This charge reflects the write-off of the unaccreted portion
of the value assigned to certain detachable warrants issued in
connection with the senior subordinated notes, the write-off of
deferred debt issuance costs and the payment of redemption
premiums.
Prior to the acquisition of Morse, 94% of the Morse
convertible debentures converted into Morse common stock. Since
the acquisition of Morse on January 30, 1993, holders of $2.7
million of additional Morse convertible debentures converted their
debt into 49,820 shares of J. Baker common stock. The remaining
balance of $353,000 convertible debentures accrue no interest
until January 15, 1997, at which time the rate will be 8%, and no
principal will be payable until January 15, 2002. The debt is
subject, under certain circumstances, to mandatory conversion.
Approximately 6,500 shares of J. Baker common stock are reserved
for any future conversions of the remaining Morse convertible
debentures.
The Company's revolving credit facility and senior
subordinated notes contain various covenants and restrictive
provisions, including restrictions on the incurrence of
additional indebtedness and liens, the payment of dividends and
the maintenance of specified financial ratios, minimum levels of
working capital and other financial criteria. At January 28,
1995, the Company was in compliance with such covenants.
The Company is restricted, under various debt agreements,
from paying cash dividends unless tangible net worth exceeds
certain required levels. As defined by the most restrictive of
those agreements, minimum tangible net worth, as so defined, was
$198 million at January 28, 1995. At January 28, 1995, the
Company's tangible net worth, as so defined, was approximately
$237 million.
Scheduled principal repayments of long-term debt, senior
subordinated notes and convertible subordinated debt for the next
five fiscal years and thereafter are as follows:
<TABLE>
<S> <C>
Fiscal year
ending January
--------------
1996 $ 1,500,000
1997 1,500,000
1998 129,800,000
1999 1,500,000
2000 1,500,000
Thereafter 70,353,000
</TABLE>
<PAGE>29
(8) Taxes on Earnings
-----------------
In February 1992, the Financial Accounting Standards Board
issued Statement of Financial Accounting Standards No. 109,
Accounting for Income Taxes. Statement 109 requires a change from
the deferred method of accounting for income taxes. Under the
asset and liability method of Statement 109, deferred tax assets
and liabilities are recognized for the estimated future tax
consequences attributable to differences between the financial
statement carrying amounts of existing assets and liabilities and
their respective tax bases. Deferred tax assets and liabilities
are measured using enacted tax rates expected to apply to taxable
income in the years in which those temporary differences are
expected to be recovered or settled. Under Statement 109, the
effect on deferred tax assets and liabilities of a change in tax
rates is recognized in income in the period that includes the
enactment date.
The Company adopted Statement 109 as of February 2, 1992.
The impact of adopting Statement 109 was not material, and
accordingly, there is no cumulative effect of a change in
accounting method presented in the consolidated statement of
earnings for the year ended January 30, 1993.
Total income tax expense (benefit) for the years ended
January 28, 1995, January 29, 1994 and January 30, 1993 was
allocated as follows:
<TABLE>
<S> <C> <C> <C>
1995 1994 1993
---- ---- ----
Income from continuing
operations $13,283,000 $13,113,000 $ 7,798,000
Extraordinary item - - (1,262,000)
---------- ---------- ----------
$13,283,000 $13,113,000 $ 6,536,000
========== ========== ==========
</TABLE>
Income tax expense attributable to income from continuing
operations consists of:
<TABLE>
<S> <C> <C> <C>
Current Deferred Total
------- -------- -----
Year ended January 28, 1995:
Federal $4,132,000 $5,308,000 $9,440,000
State and city 2,100,000 1,743,000 3,843,000
--------- ---------- ---------
$6,232,000 $7,051,000 $13,283,000
========= ========== ===========
Year ended January 29, 1994:
Federal $1,773,000 $9,827,000 $11,600,000
State and city 1,454,000 59,000 1,513,000
--------- --------- ----------
$3,227,000 $9,886,000 $13,113,000
========== ========== ===========
Year ended January 30, 1993:
Federal $4,869,000 $1,621,000 $6,490,000
State and city 1,487,000 (179,000) 1,308,000
---------- ---------- ----------
$6,356,000 $1,442,000 $7,798,000
========== ========== ==========
</TABLE>
The following is a reconciliation between the statutory
federal income tax rate and the Company's effective rate for the
years ended January 28, 1995, January 29, 1994 and January 30,
1993:
<TABLE>
<S> <C> <C> <C>
1995 1994 1993
---- ---- -----
Statutory federal income
tax rate 35.0% 35.0% 34.0%
State income taxes, net of
federal income tax benefit 6.8% 1.5% 4.1%
Jobs tax credits (1.6%) (1.4%) (0.3%)
Change in beginning of year
balance of the valuation
allowance for deferred tax assets (2.6%) 5.7% -
Change in federal tax rate - (1.2%) -
Other (1.6%) (3.6%) (0.8%)
------ ------ ------
36.0% 36.0% 37.0%
====== ====== ======
</TABLE>
<PAGE>30
The tax effects of temporary differences that give rise to
significant portions of the deferred tax assets and deferred tax
liabilities at January 28, 1995 and January 29, 1994 are presented
below:
<TABLE>
<S> <C> <C>
1995 1994
Deferred tax assets: ---- ----
Accounts receivable, principally due
to greater acquired tax bases $ 550,000 $ 1,146,330
Inventory, principally due to
additional costs capitalized for
tax purposes and greater acquired
tax bases 3,500,000 6,326,527
Intangible assets (105,000) 96,827
Other assets 573,000 2,437,061
Nondeductible accruals and reserves 7,304,000 10,535,696
Operating loss and credit
carryforwards 21,897,000 21,818,686
---------- ----------
Total gross deferred tax assets 33,719,000 42,361,127
Less valuation allowance (14,969,000) (15,914,000)
----------- -----------
Net deferred tax assets 18,750,000 26,447,127
----------- -----------
Deferred tax liabilities:
Fixed assets, principally due to
accelerated tax depreciation
and lesser acquired tax bases (13,767,000) (12,727,639)
Intangible assets, principally due
to lesser acquired tax bases (6,723,000) (7,226,244)
Other liabilities (2,276,000) (3,618,769)
----------- -----------
Total gross deferred tax liabilities (22,766,000) (23,572,652)
----------- -----------
Net deferred tax asset (liability) $(4,016,000) $ 2,874,475
=========== ===========
</TABLE>
At January 28, 1995 and January 29, 1994, the net deferred
tax asset (liability) consisted of the following:
<TABLE>
<S> <C> <C>
1995 1994
---- ----
Deferred tax asset - current $ 2,120,000 $ 1,664,475
Deferred tax asset - noncurrent - 1,210,000
Deferred tax liability - noncurrent (6,136,000) -
---------- ----------
$(4,016,000) $ 2,874,475
========== ==========
</TABLE>
The valuation allowance for deferred tax assets as of
January 29, 1994 was $15,914,000. The net change in the total
valuation allowance for the year ended January 28, 1995 was a
decrease of $945,000.
At January 28, 1995, the Company has net operating loss
carryforwards for federal income tax purposes of approximately
$51.3 million, which are principally the net operating loss
carryforwards acquired in the merger with Morse. Under federal
income tax rules, Morse's net operating loss carryforwards may
only be utilized to offset its own future taxable income, expire
in years 2005 through 2009, and are subject also to an annual
limitation of approximately $3.4 million. The Company also has
alternative minimum tax credit carryforwards of approximately $8.6
million available to reduce future regular federal income taxes,
if any, over an indefinite period.
(9) Pension and Profit Sharing Plans
--------------------------------
The Company has a noncontributory pension plan (the
"Pension Plan") which covers substantially all non-union employees
and is administered by Trustees who are officers of the Company.
As of January 1, 1994, SCOA employees are eligible to participate
in the Company's Pension Plan.
<PAGE>31
The following table sets forth the Pension Plan's funded
status at January 28, 1995 and January 29, 1994:
<TABLE>
1995 1994
---- ----
<S> <C> <C>
Actuarial present value of
benefit obligations:
Vested $ 7,637,000 $6,397,000
Nonvested 704,000 392,000
---------- ----------
Total accumulated benefit
obligations $ 8,341,000 $6,789,000
=========== ==========
Plan assets at fair value $10,183,000 $9,251,000
Actuarial present value of
projected benefit obligations (12,823,000) (11,207,000)
----------- -----------
Deficiency of plan assets over
projected benefit obligations (2,640,000) (1,956,000)
Unrecognized prior service cost
(benefit) (90,000) (98,000)
Unrecognized net transitional
liability 1,221,000 1,342,000
Unrecognized net actuarial
(gain) loss 229,000 (683,000)
--------- ----------
Accrued pension cost $(1,280,000) $(1,395,000)
============ ===========
</TABLE>
In December 1993, the Board of Directors of the Company
established a Supplemental Retirement plan (the "Supplemental
Plan") to provide benefits attributable to compensation in excess
of $150,000, but less than $242,280. The following table sets
forth the Supplemental Retirement plan's funded status at January
28, 1995:
<TABLE>
<S> <C>
Actuarial present value of benefit obligation:
Vested $ 23,000
Nonvested 10,000
---------
Total accumulated benefit obligations $ 33,000
=========
Plan assets at fair value $ 0
Actuarial present value of projected
benefit obligations (791,000)
---------
Deficiency of plan assets over
projected benefit obligations (791,000)
Unrecognized prior service cost 594,000
Unrecognized net actuarial loss 10,000
--------
Accrued pension cost $(187,000)
=========
</TABLE>
Assumptions used to develop the plans' funded status were
discount rate (8.5% in 1995, 7.5% in 1994) and increase in
compensation levels (5%).
Net pension cost for the years ended January 28, 1995,
January 29, 1994 and January 30, 1993 included the following
components:
<TABLE>
<S> <C> <C> <C>
1995 1994 1993
---- ---- ----
Service cost - benefits earned
during the year $1,223,000 $ 767,000 $ 657,000
Interest cost on projected
benefit obligation 1,056,000 869,000 730,000
Actual return on plan assets (66,000) (763,000) (623,000)
Net amortization and deferral (565,000) 234,000 104,000
---------- ---------- ---------
Net pension cost $1,648,000 $1,107,000 $ 868,000
========== ========== =========
</TABLE>
<PAGE>32
Assumptions used to develop the net periodic pension cost
were discount rates (7.5% and 7.0% for the Pension Plan and the
Supplemental Plan, respectively), expected long-term return on
assets (8.5%) and increase in compensation levels (5.0%).
In January 1992, the Company implemented a qualified 401(k)
profit sharing plan available to full-time employees who meet the
plan's eligibility requirements. Under the 401(k) plan, the
Company matches 50% of the qualified employee's contribution up to
3% of the employee's salary. The total cost of the matching
contribution was $915,000, $1,033,000 and $448,000 for the years
ended January 28, 1995, January 29, 1994 and January 30, 1993,
respectively. In connection with the acquisition of Morse, on
January 30, 1993 the Company merged Morse's 401(k) plan into the
Company's 401(k) plan.
The Company has established incentive bonus plans for
certain executives and employees. The bonus calculations are
based on the achievement of certain profit levels, as defined in
the plans. For the years ended January 28, 1995, January 29, 1994
and January 30, 1993, $940,000, $1,025,000 and $1,643,000,
respectively, was provided for bonuses under the plans.
The Company does not provide post-retirement benefits other
than pensions as defined under SFAS #106.
(10) Stock Options
--------------
The Amended and Restated 1985 Stock Option Plan provides
for the issuance of incentive and non-qualified stock options to
key employees at an option price of not less than 100% of the fair
market value of a share on the date of grant of the option. Under
this plan, there are 55,095 shares of common stock available for
grant at January 28, 1995. No options can be granted under this
plan after June, 1995. In addition, the Company has granted stock
options which are not part of the plan. Options become
exercisable either ratably over four years or upon grant, at the
discretion of the Board of Directors, and expire ten years from
the date of grant.
The 1992 Directors' Stock Option Plan provides for the
automatic grant of an option to purchase 2,500 shares of the
Company's common stock upon initial election to the Board of
Directors and, in addition, at the close of business on the fifth
business day following the Company's annual meeting of
stockholders. Options under the Directors' Plan are granted at a
price equal to the closing price of the Company's common stock on
the date of grant. They are exercisable in full as of the date of
grant and expire ten years from the date of grant. Under this
plan, there are 50,000 shares of common stock available for grant
at January 28, 1995.
<PAGE>33
Data with respect to stock options granted is as follows:
<TABLE>
1985 Plan and Directors'
Stock Option Plan Non-plan
Shares Price Range Shares Price Range
------ ------------ ------- ------------
<S> <C> <C> <C> <C>
February 2, 1992,
options outstanding 496,900 $ .95 - 17.00 72,500 $ .01 - 16.63
Granted 150,300 10.88 - 17.38 2,500 12.00
Exercised (68,323) .95 - 17.00 (12,500) .01 - 5.00
Cancelled (8,700) 4.88 - 16.63 - -
------- ------------- ------- ------------
January 30, 1993,
options outstanding 570,177 .95 - 17.38 62,500 6.75 - 16.63
Granted 452,500 16.50 - 23.75 - -
Exercised (129,232) .95 - 17.00 - -
Cancelled (71,025) 4.88 - 21.75 - -
-------- ------------- ------ -------------
January 29, 1994,
options outstanding 822,420 .95 - 23.75 62,500 6.75 - 16.63
Granted 336,025 14.38 - 21.00 - -
Exercised (48,000) 4.88 - 17.00 - -
Cancelled (81,550) 4.88 - 21.75 - -
------- ------------- ------- -------------
January 28, 1995,
options outstanding 1,028,895 $ .95 - 23.75 62,500 $6.75 - 16.63
========= ============ ====== =============
Exercisable at
January 28, 1995 391,445 $ .95 - 23.75 62,500 $6.75 - 16.63
========= ============ ====== =============
</TABLE>
In fiscal 1995, the Company established the 1994 Equity
Incentive Plan, which provides for the issuance of one million
shares of common stock to officers and employees in the form of
stock options (both incentive options and non-qualified options),
grants of restricted stock, grants of performance shares and
unrestricted grants of stock. At January 28, 1995, one million
shares of common stock are available for grant.
(11) Commitments and Contingent Liabilities
--------------------------------------
Leases
The Company operates mainly from leased premises under
license agreements generally requiring payment of annual rentals
contingent upon sales. The Company leases its computers, vehicles
and certain of its offices and warehouse facilities, in addition
to its retail stores.
At January 28, 1995, minimum rental commitments under
operating leases are as follows:
<TABLE>
Fiscal Year
ending January Net minimum rentals Minimum sub-rentals
-------------- ------------------- -------------------
(in thousands)
<S> <C> <C>
1996 $ 54,828 $ 379
1997 47,979 127
1998 42,812 121
1999 35,403 81
2000 23,354 81
Thereafter 49,570 106
------- ------
$253,946 $ 895
======= ======
</TABLE>
<PAGE>34
Rent expense for the years ended January 28, 1995, January
29, 1994 and January 30, 1993 was as follows:
<TABLE>
1995 1994 1993
---- ---- ----
(in thousands)
<S> <C> <C> <C>
Minimum rentals $ 53,189 $ 46,012 $ 19,984
Contingent rentals 90,275 78,694 49,107
------- ------- -------
143,464 124,706 69,091
Less sublease rentals 409 332 293
------- -------- -------
Net rentals $143,055 $124,374 $ 68,798
======== ======== ========
</TABLE>
Other Commitments and Contingent Liabilities
The Company has employment agreements with certain of its
officers under which it is committed to pay an aggregate of
approximately $3.2 million through January, 1997.
The Company also has consulting agreements under which it
is required to pay an aggregate of approximately $1.5 million
through 2001.
The Company was contingently liable under letters of credit
amounting to approximately $31.8 million at January 28, 1995.
On November 10, 1993, a federal jury in Minneapolis, MN
returned a verdict assessing royalties of $1,550,000, and
additional damages of $1,500,000 against the Company in a patent
infringement suit brought by Susan Maxwell with respect to a
device used to connect pairs of shoes. Certain post trial motions
were filed by Susan Maxwell seeking treble damages, attorney's
fees and injunctive relief, which motions were granted on March
10, 1995. Judgment will be entered for Maxwell. The Company
intends to appeal the judgment and believes it has substantial
legal arguments to justify the judgment being overturned at the
appellate level. In the event the Company were not to prevail,
however, total damages, including attorney's fees and interest,
are estimated to be approximately $10 million.
A complaint was also filed by Susan Maxwell in November,
1992 against Morse alleging infringement of the patent referred to
above. The case is currently in the discovery phase, and a trial
date has not yet been set. The Company believes that Ms. Maxwell's
recovery against Morse, if any, will be less than her recovery
against the Company because the number of allegedly infringing
pairs of shoes is substantially less than those involved in the
Company's case. Further, the Company believes that any recovery
may be limited to the number of pairs allegedly infringing the
patent during the time period after the confirmation of Morse's
Chapter 11 Plan of Reorganization on December 20, 1991.
(12) Stockholders' Equity
--------------------
The Board of Directors of the Company is authorized by vote
or votes, from time to time adopted, to provide for the issuance
of Preferred Stock in one or more series and to fix and state the
voting powers, designations, preferences and relative
participating, optional or other special rights of the shares of
each series and the qualifications, limitations and restrictions
thereof.
On December 15, 1994, the Board of Directors of the Company
adopted a Shareholder Rights Agreement (the "Rights Agreement")
designed to enhance the Company's ability to protect shareholder
interests and to ensure that shareholders receive fair treatment
in the event any coercive takeover attempt of the Company is made
in the future. Pursuant to the Rights Agreement, the Board of
Directors declared a dividend distribution of one preferred stock
purchase right (the "Right") for each outstanding share of common
stock of the Company to shareholders of record as of the close of
business on January 6, 1995. Each right entitles the holder to
purchase from the Company a unit consisting of one ten thousandth
(1/10,000) of a share of Series A Junior Participating Cumulative
Preferred Stock, par value $1.00 per share, at a cash exercise
price of $70 per unit, subject to adjustment, upon the occurrence
of certain events as are set forth in the Rights Agreement. These
<PAGE>35
events include the earliest to occur of (i) acquisition of 15% or
more of the outstanding shares of common stock of the Company by
any person or group (ii) the commencement of a tender or exchange
offer that would result upon its consummation in a person or a
group becoming the beneficial owner of 15% or more of the
outstanding common stock of the Company or (iii) the determination
by the Board of Directors that any person is an "Adverse Person",
as defined in the Rights Agreement. The Rights are not
exercisable until or following the occurrence of one of the above
events and will expire on December 14, 2004, unless previously
redeemed or exchanged by the Company as provided in the Rights
Agreement.
(13) Principal Licensor
------------------
Sales in licensed departments operated under the Ames license
agreement accounted for 9.5%, 11.5% and 22.9% of the Company's net
sales in the years ended January 28, 1995, January 29, 1994 and
January 30, 1993, respectively.
(14) Segment Information
-------------------
The Company is a specialty retailer conducting business
through retail stores in two business segments; footwear and
apparel. Information about operations for each of these segments
is summarized as follows:
<TABLE>
Year Ended
----------------------------------
January 28, January 29, January 30,
1995 1994 1993
---------- ---------- ----------
($ in thousands)
<S> <C> <C> <C>
Footwear
Net sales $818,220 $734,827 $380,243
Operating profit 44,993 43,382 17,460
Identifiable assets 456,552 396,958 341,407
Depreciation and amortization 20,363 15,075 10,951
Additions to property, equipment
and leasehold improvements 31,298 13,814 2,786
Apparel
Net sales $224,759 $184,051 $152,013
Operating profit 26,974 23,802 22,438
Identifiable assets 89,111 65,842 48,844
Depreciation and amortization 4,130 2,373 714
Additions to property, equipment
and leasehold improvements 11,570 8,654 6,832
Consolidated
Net sales $1,042,979 $918,878 $532,256
Operating profit before general
corporate expense 71,967 67,184 39,898
General corporate expense (25,968) (23,318) (10,691)
Interest expense, net (9,100) (7,442) (8,131)
Earnings before income taxes $36,899 $36,424 $21,076
Identifiable assets $545,663 $462,800 $390,251
Corporate assets 32,955 39,696 41,547
Total assets $578,618 $502,496 $431,798
Depreciation and amortization $27,883 $21,874 $14,688
Additions to property, equipment
and leasehold improvements $44,514 $24,115 $11,198
</TABLE>
<PAGE>36
(15) Selected Quarterly Financial Data (Unaudited)
-----------------------------------------------
<TABLE>
First Second Third Fourth
Quarter Quarter Quarter Quarter Total
------- ------- ------- ------- ------
(In thousands, except per share data)
<S> <C> <C> <C> <C> <C>
Year ended January 28, 1995
Net sales $221,338 $256,336 $262,015 $303,290 $1,042,979
Gross profit 97,219 117,289 119,349 129,387 463,244
Net earnings $ 3,197 $ 7,134 $ 6,592 $ 6,693 $ 23,616
======== ======== ======== ======== ==========
Earnings per common share:
Primary $ .23 $ .52 $ .47 $ .49 $ 1.71
======== ======== ======== ======== =========
Fully diluted $ .22 $ .43 $ .40 $ .41 $ 1.46
======== ======== ======== ======== =========
Year ended January 29, 1994
Net sales $193,388 $232,529 $224,421 $268,540 $918,878
Gross profit 87,765 100,850 100,057 113,351 402,023
Net earnings $ 2,483 $ 6,385 $ 6,486 $ 7,957 $ 23,311
======== ======== ======== ======== ========
Earnings per common share:
Primary $ .18 $ .47 $ .48 $ .57 $ 1.70
======== ======== ======== ======== ========
Fully diluted $ .18 $ .39 $ .40 $ .48 $ 1.45
======== ======== ======== ======== ========
</TABLE>
(16) Advertising Costs
-----------------
The Company incurred advertising costs of $20.1 million,
$16.5 million and $5.1 million in the years ended January 28,
1995, January 29, 1994 and January 30, 1993, respectively.
(17) Supplemental Schedules to Consolidated Statements of Cash Flows
---------------------------------------------------------------
<TABLE>
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
Cash paid for interest $8,765,653 $6,799,091 $8,884,947
Cash paid for income taxes $4,162,348 $5,022,668 $4,718,757
========== ========== ==========
Non-cash investing activities:
Common stock issued in connection
with the acquisition of Morse
Shoe, Inc. (see Note 3) $56,841,924
===========
Common stock issued in connection
with the acquisition of Shoe
Corporation of America
(see Note 2) $ 970,704
=========
Non-cash financing activities:
Conversion of subordinated debt
(see Note 3) $2,707,000
==========
Notes receivable
(see Notes 4 and 6) $ 95,000 $846,000 $8,700,000
======== ======== ==========
</TABLE>
<PAGE>37
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE
None.
PART III
________
DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
The information appearing in the Proxy Statement under the
captions "ELECTION OF DIRECTORS", "Information About Board of
Directors and Committees", "Executive Compensation" and
"Employment Arrangements" is incorporated herein by this
reference.
EXECUTIVE COMPENSATION
The information appearing in the Proxy Statement under the
caption "Executive Compensation", "Employment Arrangements" and
"Information About Board of Directors and Committees" is
incorporated herein by this reference.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The information appearing in the Proxy Statement under the
caption "SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT" is incorporated herein by this reference.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The information appearing in the Proxy Statement under the
caption "Certain Relationships and Related Transactions" is
incorporated herein by this reference.
PART IV
_______
EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K
(a) The following documents are filed as part of this report:
1,2. The financial statements, notes thereto, and
independent auditors' report listed in the Index to Consolidated
Financial Statements set forth in Item 8.
3. The Exhibits listed in the Exhibit Index.
(b) None.
<PAGE>38
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.
_______________
(Registrant)
By/s/Sherman N. Baker By/s/Jerry M. Socol
_____________________ -----------------------
Sherman N. Baker Jerry M. Socol
Chairman of the Board President and Chief
Executive Officer
By/s/Philip G. Rosenberg By/s/Alan I. Weinstein
______________________ _______________________
Philip G. Rosenberg Alan I. Weinstein
First Senior Vice President Senior Executive Vice President
Principal Accounting Officer and Principal Financial Officer
April 25, 1995
Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed by the following persons on
behalf of the registrant and in the capacities and on the dates
indicated:
/s/Sherman N. Baker /s/J. Christopher Clifford
___________________ __________________________
Sherman N. Baker, Director J. Chistopher Clifford, Director
/s/Ervin Cruce /s/Nancy Ryan Greenberg
__________________ _______________________
Ervin Cruce, Director Nancy Ryan Greenberg, Director
/s/Douglas Kahn /s/Thomas H. Lee
__________________ _______________________
Douglas Kahn, Director Thomas H. Lee, Director
/s/David Pulver /s/Melvin M. Rosenblatt
_______________ _______________________
David Pulver, Director Melvin M. Rosenblatt, Director
/s/Stanley Simon /s/Jerry M. Socol
_______________ ______________________
Stanley Simon, Director Jerry M. Socol, Director
All as of April 25, 1995
<PAGE>39
EXHIBITS
Filed with
Annual Report on Form 10-K
of
J. BAKER, INC.
555 Turnpike Street
Canton, MA 02021
For the Year Ended January 28, 1995
<PAGE>40
EXHIBIT INDEX
<TABLE>
Exhibit
- --------
<S> <C> <C>
3. Articles of Organization and By-Laws
------------------------------------
(.01) Amended and Restated Articles of Organization of the *
Company, as filed with the Secretary of the Commonwealth of
Massachusetts on September 26, 1990 (filed as Exhibit 3.01
to the Company's Form 10-K Report for the year ended
February 2, 1991).
(.02) By-Laws of the Company, as amended by the Board of Directors *
on September 11, 1990 (filed as Exhibit 19.01 to the
Company's Form 10-Q Report for the quarter ended November 3,
1990).
4. Instruments Defining the Rights of Security Holders, Including
--------------------------------------------------------------
Indentures
-----------
(.01) Senior Notes and Senior Subordinated Notes with Stock *
Purchase Warrants dated May 1, 1989 (filed as Exhibit 4.01 to
the Company's Form 10-Q Report for the quarter ended July 29,
1989).
(.02) Indenture dated as of June 12, 1992 by and between J. Baker, *
Inc. and The First National Bank of Boston as Trustee with
respect to 7% Convertible Subordinated Notes due 2002 (filed
as Exhibit 4.08 to the Company's Form 10-Q Report for the
quarter ended August 1, 1992).
(.03) Revolving Credit and Loan Agreement by and among JBI, Inc., *
et al., and Shawmut Bank, et al., dated as of February 1,
1993 (filed as Exhibit 4.03 to the Company's Form 10-K Report
for the year ended January 30, 1993).
(.04) Guarantee Agreement dated as of February 1, 1993, between J. *
Baker, Inc., Shawmut Bank, N.A., and subsidiaries of J.
Baker, Inc. (filed as Exhibit 4.09 to the Company's Form 10-K
Report for the year ended January 30, 1993).
(.05) Security Agreement dated as of February 1, 1993, between JBI, *
Inc., J. Baker, Inc., and Shawmut Bank, N.A. (filed as
Exhibit 4.10 to the Company's Form 10-K Report for the year
ended January 30, 1993).
(.06) Stock Pledge Agreement dated as of February 1, 1993 by and *
between JBI, Inc., J. Baker, Inc., Shawmut Bank, N.A., and
subsidiaries of J. Baker, Inc. (filed as Exhibit 4.11 to the
Company's Form 10-K Report for the year ended January 30,
1993).
(.07) Indenture dated as of January 15, 1992 by and between Morse *
Shoe, Inc. and State Street Bank and Trust Company as Trustee
with respect to Convertible Subordinated Debentures due 2002
(filed as Exhibit 4.12 to the Company's Form 10-K Report for
the year ended January 30, 1993).
(.08) First Supplemental Indenture (dated as of January 30, 1993) *
to the Indenture (dated January 15, 1992) under which
Convertible Subordinated Debentures Due 2002 were issued by
Morse Shoe, Inc. (filed as Exhibit 4.01 to the Company's Form
10-Q Report for the quarter ended May 1, 1993).
* Incorporated herein by reference
<PAGE>41
Exhibit
- -------
(.09) First Amendment and Waiver Agreement by and among JBI, Inc., *
J. Baker, Inc, and Shawmut Bank, N.A., et al, dated as of
November 19, 1993 (filed as Exhibit 4.01 to the Company's
Form 10-Q Report for the quarter ended October 30, 1993).
(.10) Assumption Agreement by Tishkoff Enterprises, Inc. dated as *
of November 19, 1993 (filed as Exhibit 4.02 to the Company's
Form 10-Q Report for the quarter ended October 30, 1993).
(.11) First Amendment to Pledge Agreement by and among JBI, Inc., *
J. Baker, Inc. and Shawmut Bank, N.A., et al, dated as of
November 19, 1993 (filed as Exhibit 4.03 to the Company's
Form 10-Q Report for the quarter ended October 30, 1993).
(.12) Second Amendment to Pledge Agreement by and among JBI, Inc., *
J. Baker, Inc. and Shawmut Bank, N.A., et al, dated as of
December 30, 1993 (filed as Exhibit 4.14 to the Company's
Form 10-K Report for the year ended January 29, 1994).
(.13) Assumption Agreement by Shoe Corporation of America, Inc. *
dated as of December 30, 1993 (filed as Exhibit 4.15 to the
Company's Form 10-K Report for the year ended January 29,
1994).
(.14) Second Amendment Agreement by and among JBI, Inc, J. Baker, *
Inc. and Shawmut Bank, N.A., et al dated as of April 29, 1994
(filed as Exhibit 4.01 to the Company's Form 10-Q Report for
the quarter ended April 30, 1994).
(.15) Third Amendment Agreement to Revolving Credit and Loan *
Agreement by and among JBI, Inc., J. Baker, Inc., and Shawmut
Bank, N.A., et al, dated December 1, 1994 (filed as Exhibit
4.01 to the Company's Form 10-Q Report for the quarter ended
October 29, 1994).
(.16) Fourth Amendment Agreement to Revolving Credit and Loan **
Agreement by and among JBI, Inc., J. Baker, Inc. and Shawmut
Bank, N.A., et al, dated as of March 6, 1995, attached.
(.17) Shareholder Rights Agreement between J. Baker, Inc. and Fleet *
National Bank, dated as of December 15, 1994 (filed as
Exhibit 4.1 to the Company's Form 8-K Report dated December
15, 1994).
10. Material Contracts
-------------------
(.01) License Agreement between Ames Department Stores, Inc., et al *
and JBI Holding Company, Inc. (filed as Exhibit 10.01 to the
Company's Form 10-K Report for the year ended January 30,
1988).
(.02) Agreement between JBI Holding Company, Inc. and JBI, Inc. re: *
Assignment of Ames License Agreement (filed as Exhibit 10.02
to the Company's Form 10-K Report for the year ended January
30, 1988).
(.03) Amendment No. 1 dated April 29, 1989 to Agreement between *
Ames Department Stores, Inc. and JBI Holding Company, Inc.
(filed as Exhibit 10.04 to the Company's Form 10-Q Report for
the quarter ended April 29, 1989).
* Incorporated herein by reference
**Included herein
<PAGE>42
Exhibit
- --------
(.04) Amendment No. 2 dated December 18, 1992, to Agreement between *
Ames Department Stores, Inc. and JBI Holding Company, Inc.
(filed as Exhibit 10.04 to the Company's Form 10-K Report for
the year ended January 30, 1993).
(.05) Guaranty and Indemnity Agreement dated April 28, 1989 between *
J. Baker, Inc. and Ames Department Stores, Inc. (filed as
Exhibit 10.05 to the Company's Form 10-Q Report for the
quarter ended April 29, 1989).
(.06) Amended Cash Incentive Compensation Plan (filed as Exhibit *
19.01 to the Company's Form 10-Q Report for the quarter ended
August 3, 1991).
(.07) J. Baker Senior Executive Performance Stock Incentive Plan *
(filed as Exhibit 10.10 to the Company's Form 10-K Report for
the year ended February 3, 1990).
(.08) Plan of Reorganization of The Casual Male Corporation dated *
November 1, 1990 as revised November 20, 1990 (filed as
Exhibit 2.01 to the Company's Form 10-Q Report for the
quarter ended November 3, 1990).
(.09) Executive Employment Agreement dated March 25, 1993 between *
Sherman N. Baker and J. Baker, Inc. (filed as Exhibit 10.01
to the Company's Form 10-Q Report for the quarter ended July
31, 1993).
(.10) Amendment to Employment Agreeement between J. Baker, Inc. and **
Sherman N. Baker, dated March 31, 1995, attached.
(.11) Executive Employment Agreement dated March 25, 1993 between *
Alan I. Weinstein and J. Baker, Inc. (filed as Exhibit 10.04
to the Company's Form 10-Q Report for the quarter ended July
31, 1993).
(.12) Amendment to Employment Agreement, between J. Baker, Inc. and *
Alan I. Weinstein, dated April 27, 1994 (filed as Exhibit
10.01 to the Company's Form 10-Q Report for the quarter ended
July 30, 1994).
(.13) Executive Employment Agreement dated March 25, 1993 between *
Jerry M. Socol and J. Baker, Inc. (filed as Exhibit 10.11 to
the Company's Form 10-K Report for the year ended January 29,
1994).
(.14) Executive Employment Agreement dated March 25, 1993 between *
Linda B. Kanner and J. Baker, Inc. (filed as Exhibit 10.05 to
the Company's Form 10-Q Report for the quarter ended July 31,
1993).
(.15) Amendment to Employment Agreement, between J. Baker, Inc. and *
Linda B. Kanner, dated April 27, 1994 (filed as Exhibit 10.03
to the Company's Form 10-Q Report for the quarter ended July
30, 1994).
(.16) Executive Employment Agreement dated March 25, 1993 between *
Larry I. Kelley and J. Baker, Inc. (filed as Exhibit 10.06 to
the Company's Form 10-Q Report for the quarter ended July 31,
1993).
(.17) Amendment to Employment Agreement, between J. Baker, Inc. and *
Larry I. Kelley, dated April 27, 1994 (filed as Exhibit 10.02
to the Company's Form 10-Q Report for the quarter ended July
30, 1994).
* Incorporated herein by reference
**Included herein
<PAGE>43
Exhibit
- --------
(.18) Promissory Note of Larry I. Kelley dated June 3, 1991 (filed *
as Exhibit 10.33 to the Company's Form 10-K Report for the
year ended February 1, 1992).
(.19) Promissory Note of Larry I. Kelley dated February 2, 1993 *
(filed as Exhibit 10.15 to the Company's Form 10-K Report for
the year ended January 29, 1994).
(.20) Promissory Note of Larry I. Kelley dated April 30, 1993 *
(filed as Exhibit 10.16 to the Company's Form 10-K Report for
the year ended January 29, 1994).
(.21) Executive Employment Agreement dated as of June 1, 1993 *
between John E. Lattanzio and J. Baker, Inc, (filed as
Exhibit 10.01 to the Company's Form 10-Q report for the
quarter ended October 30, 1993).
(.22) Amendment to Employment Agreement, between John E. Lattanzio **
and J. Baker, Inc., dated February 9, 1995, attached.
(.23) Executive Employment Agreement dated as of November 1, 1993 *
between Stuart M. Needleman and J. Baker, Inc. (filed as
Exhibit 10.03 to the Company's Form 10-Q Report for the
quarter ended October 30, 1993).
(.24) Amendment to Employment Agreement, between Stuart M. **
Needleman and J. Baker, Inc., dated February 13, 1995,
attached.
(.25) Executive Employment Agreement dated as of November 19, 1993 *
between Dennis B. Tishkoff and J. Baker, Inc. (filed as
Exhibit 10.04 to the Company's Form 10-Q Report for the
quarter ended October 30, 1993).
(.26) Amendment to Employment Agreement, between Dennis B. Tishkoff **
and J. Baker, Inc., dated February 8, 1995, attached.
(.27) Executive Employment Agreement dated as of January 26, 1995 **
between James Lee and J. Baker, Inc., attached.
(.28) J. Baker, Inc. Amended and Restated 1985 Stock Option Plan *
(filed as Exhibit 19.02 to the Company's Form 10-Q Report for
the quarter ended August 1, 1992).
(.29) J. Baker, Inc. 1994 Equity Incentive Plan dated as of March *
29, 1994 (filed as Exhibit 10.23 to the Company's Form 10-K
Report for the year ended January 29, 1994).
(.30) J. Baker, Inc. 1992 Directors Stock Option Plan dated as of *
April 13, 1992 (filed as Exhibit 19.03 to the Company's Form
10-Q Report for the quarter ended August 1, 1992).
(.31) Stock Option Agreements between Jerry M. Socol and J. Baker, *
Inc. (filed as Exhibit 10.12 to the Company's Form 10-K
Report for the year ended January 28, 1989).
(.32) Mortgage and Security Agreement dated as of December 30, 1992 *
by and between JBI Holding Company, Inc. and Ames Department
Stores, Inc., (filed as Exhibit 10.22 to the Company's Form
10-K Report for the year ended January 30, 1993).
* Incorporated herein by reference
**Included herein
<PAGE>44
Exhibit
- ---------
(.33) Promissory Note dated as of December 30, 1992 made by Ames *
Department Stores, Inc. in favor of JBI Holding Company, Inc.
(filed as Exhibit 4.14 to the Company's Form 10-K Report for
the year ended January 30, 1993).
(.34) Stock Purchase Agreement by and among J. Baker, Inc. and *
Tishkoff Enterprises, Inc. and certain stockholders of
Tishkoff Enterprises, Inc. dated November 19, 1993 (filed
as Exhibit 2.01 to the Company's Form 10-Q Report dated
October 30, 1993).
(.35) Agreement and Plan of Reorganization by and among J. Baker, *
Inc., Morse Acquisition, Inc. and Morse Shoe, Inc. dated
October 22, 1992, as amended by Letter Amendments dated
December 7, 1992 and December 10, 1992 (filed as Exhibits
2.01-2.03 to the Company's Form 10-Q Report dated October 31,
1992).
(.36) Agreement of Merger among J. Baker, Inc., JBAK Acquisition *
Corp. and Tishkoff Enterprises, Inc. dated December 3, 1993
(filed as Exhibit 10.30 to the Company's Form 10-K Report for
the year ended January 29, 1994).
11. Statement re: Computation of Primary and Fully Diluted **
-------------------------------------------------------
Earnings Per Share, attached.
----------------------------
12. Statement re: Computation of Earnings to Fixed Charges, **
--------------------------------------------------------
attached.
---------
22. Subsidiaries of the Registrant, attached. **
-----------------------------------------
23. Consent of KPMG Peat Marwick, attached. **
--------------------------------------
27. Financial Data Schedule, attached. **
----------------------------------
</TABLE>
* Incorporated herein by reference
EXHIBIT 4.16
FOURTH AMENDMENT AGREEMENT
FOURTH AMENDMENT AGREEMENT dated as of March 6, 1995,
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, by the
SECOND AMENDMENT AGREEMENT relating thereto dated as of April 29,
1994 and by the THIRD AMENDMENT AGREEMENT relating thereto dated
as of December 1, 1994 and as 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) delete Section
9.15 in its entirety and (ii) 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 March 6, 1995
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. Section 10.01.4(a) of the CREDIT AGREEMENT is
amended to read in its entirety as follows:
"(a) Permit LEVERAGE at any time to exceed,
during each period specified below, the percentage set
forth opposite the reference to such period (subject to
clause (b) below):
Period Maximum Leverage
From the CLOSING DATE
to but not including
the last day of the
fiscal quarter
ending on or about
February 1, 1995 122%
From the end of the
immediately preceding
period to but not
including the last day
of the fiscal quarter
ending on or about
February 1, 1996 130%
From the end of the
immediately preceding
period to but not
including the last day
of the fiscal quarter
ending on or about
February 1, 1997 125%
At all times thereafter 100%"
B. Section 10.01.4(b) of the CREDIT AGREEMENT is
amended to read in its entirety as follows:
"(b) Permit LEVERAGE to exceed, on each date
specified below, the percentage set forth opposite
the reference to such date:
Date Maximum Leverage
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 122%
the last day of
the fiscal quarter
ending on or about
February 1, 1996 110%
the last day of
the fiscal quarter
ending on or about
February 1, 1997 100%"
C. The introductory sentence of Section 10.01.5 of the
CREDIT AGREEMENT is amended to read in its entirety as follows:
"At the end of each fiscal quarter of each FISCAL YEAR and
with respect to the six or twelve month period, as
applicable, then ending:"
D. Section 10.01.5(c) of the CREDIT AGREEMENT is
amended to read in its entirety as follows:
"(c) The applicable percentages to be used in
Section 10.01.5(a) shall be as follows for each of the
following respective periods:
Period Minimum Percentage
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 112%
From the first day of the
FISCAL YEAR beginning on
or about February 1, 1995
to and including the last
day of the fiscal quarter
ending on or about
August 1, 1995 112%
From the first day of the
fiscal quarter beginning on
or about August 1, 1995
to and including the last
day of the FISCAL YEAR
ending on or about
February 1, 1996 115%
From the first day of the
FISCAL YEAR beginning on
or about February 1, 1996
to and including the last
day of the FISCAL YEAR
ending on or about
February 1, 1997 125%
At all times thereafter 135%"
E. Section 9.15 is deleted in its entirety.
F. 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
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
Section 2 above, this Agreement shall become effective as of the
date the AGENT shall first notify the BORROWER it has received:
(a) counterparts of this Agreement duly executed and
delivered by each of the parties hereto; and
(b) an amendment fee paid by the BORROWER to the AGENT,
for the pro rata benefit of the BANKS, in an amount equal to
$125,000.
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.
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/ Philip Rosenberg
---------------------------
Title: First Sr. Vice President
J. BAKER, INC.
By /s/ Philip Rosenberg
-------------------------------
Title: First Sr. 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
NATWEST BANK N.A.
(formerly "National Westminster
Bank USA")
By /s/ Paul Chau
------------------------------
Title: Vice President
CITIZENS BANK OF MASSACHUSETTS
By /s/ Kathryn Bacastow
----------------------------
Title: Sr. Vice President
STANDARD CHARTERED BANK
By /s/ Gerard Lob
-----------------------------
Title: Vice President
By /s/ Marguerite J. Felsenfeld
-------------------------------
Title: Administrative Officer
THE YASUDA TRUST & BANKING
CO., LTD.
By /s/ Joel J. Powers
-----------------------------
Title: Vice President
FUJI BANK, LIMITED
By
----------------------------
Title:
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 FOURTH AMENDMENT
AGREEMENT and confirm that
our obligations under the
GUARANTEE and the PLEDGE
AGREEMENT shall remain
unchanged and in full
force and effect.
Dated: March 6, 1995
SPENCER COMPANIES, INC.
By /s/ Philip Rosenberg
-------------------------
Title: First Sr. Vice President
SPENCER NO. 301 CORP.
By /s/ Philip Rosenberg
-------------------------
Title: First Sr. Vice President
JBI HOLDING COMPANY, INC.
By /s/ Philip Rosenberg
--------------------------
Title: First Sr. Vice President
THE CASUAL MALE, INC.
By /s/ Philip Rosenberg
----------------------------
Title: First Sr. Vice President
WGS CORP.
By /s/ Philip Rosenberg
-----------------------------
Title: First Sr. Vice President
TCM HOLDING COMPANY, INC.
By /s/ Philip Rosenberg
----------------------------
Title: First Sr. Vice President
MORSE SHOE, INC.
By /s/ Philip Rosenberg
----------------------------
Title: First Sr. Vice President
BUCKMIN, INC.
By /s/ Philip Rosenberg
----------------------------
Title: First Sr. Vice President
ELM EQUIPMENT CORP.
By /s/ Philip Rosenberg
----------------------------
Title: First Sr. Vice President
JARED CORPORATION
By /s/ Philip Rosenberg
----------------------------
Title: First Senior Vice President
MORSE SHOE (CANADA) LTD.
By /s/ Philip Rosenberg
----------------------------
Title: First Senior Vice President
MORSE SHOE INTERNATIONAL, INC.
By /s/ Philip Rosenberg
-----------------------------
Title: First Senior Vice President
ISAB, INC.
By /s/ Philip Rosenberg
-------------------------------
Title: First Senior Vice President
WHITE CAP FOOTWEAR, INC.
By /s/ Philip Rosenberg
-------------------------------
Title: First Senior Vice President
EXHIBIT 10.26
AMENDMENT
TO EMPLOYMENT AGREEMENT
DATED NOVEMBER 19, 1993
Reference is made to the Executive Employment Agreement
dated as of November 19, 1993 (the "Agreement") by and between J.
Baker, Inc. and Dennis B. Tishkoff. Pursuant to paragraph 19 of
the Agreement and in order to amend certain provisions of the
Agreement, the Agreement is hereby amended as follows:
1. Paragraph 6 of the Agreement is hereby amended by
deleting the phrase "ending on November 19, 1995" in the fourth
line thereof and inserting in its place the phrase "ending
on April 1, 1996".
2. All other terms of the Agreement shall remain
unchanged and continue in full force and effect.
J. BAKER, INC.
/s/ Jerry M. Socol February 8, 1995
------------------------ -------------------
By: Jerry M. Socol Date
President and
Chief Executive Officer
/s/ Dennis B. Tishkoff February 8, 1995
------------------------- -------------------
Dennis B. Tishkoff Date
EXHIBIT 10.22
AMENDMENT
TO EMPLOYMENT AGREEMENT
DATED JUNE 1, 1993
Reference is made to the Executive Employment Agreement
dated as of June 1, 1993 (the "Agreement") by and between J. Baker,
Inc. and John E. Lattanzio. Pursuant to paragraph 19 of the
Agreement and in order to amend certain provisions of the
Agreement, the Agreement is hereby amended as follows:
1. Paragraph 6 of the Agreement is hereby amended by
deleting the phrase "ending on April 1, 1995" in the fourth line
thereof and inserting in its place the phrase "ending on April
1, 1996".
2. All other terms of the Agreement shall remain
unchanged and continue in full force and effect.
J. BAKER, INC.
/s/ Jerry M. Socol February 9, 1995
----------------------- ----------------
By: Jerry M. Socol Date
President and
Chief Executive Officer
/s/John E. Lattanzio February 9, 1995
------------------------ ----------------
John E. Lattanzio Date
EXHIBIT 10.27
EXECUTIVE EMPLOYMENT AGREEMENT
This Agreement is dated as of January 26, 1995 by and between
James D. Lee (the "Employee") and J. BAKER, INC., a Massachusetts
corporation together with any subsidiaries of the Company (the
"Company").
WHEREAS, the Employee and the Company desire to set forth in
writing the terms and conditions of the Employee's employment
agreement with the Company from the date hereof;
NOW, THEREFORE, in consideration of the mutual covenants
contained herein, the parties hereto agree as follows:
1. Employment. Under and subject to the terms and
conditions set forth herein, the Company hereby agrees to employ
the Employee during the Term (as defined in Section 6 hereof) as
its Executive Vice President and President of its Licensed Discount
Footwear division and/or in such other senior executive management
position(s) with the Company, or any parent or subsidiary of the
Company, as the Board of Directors of the Company (the "Board") may
determine from time to time, and the Employee hereby accepts such
employment.
2. Duties. The Employee agrees, during the Term and any
extension of the Term, faithfully to perform for the Company, such
duties as may be assigned to him from time to time by the Company.
The Employee further agrees to devote his entire business time,
attention and energies exclusively to such employment and to
conform to the rules, regulations, instructions, personnel
practices and policies of the Company and its subsidiaries, as
existing and amended from time to time. The Employee may be
required to relocate his principal residence only to an area in
which the Company or a subsidiary of the Company has or determines
to have significant operations.
3. Compensation.
(a) Base Salary. The Company shall pay the Employee during
the Term an annual base salary of not less than $225,000, payable
no less often than monthly, in equal installments.
(b) Cash Incentive Compensation. In addition to his annual
base salary as determined pursuant to Section 3(a), the Company
shall pay to the Employee a guaranteed bonus payment (the
"Guaranteed Bonus Payment") equal to $50,000 per year for the first
two years of his employment. For the Incentive Plan year ending
January 28, 1995, such payments shall be pro rated from July 11,
1994, the Employee's date of hire. For the Incentive Plan Year
commencing January 29, 1995 and ending on February 3, 1996, the
Employee will be paid the full amount of the Guaranteed Bonus. For
the Incentive Plan Year commencing February 4, 1996, such
Guaranteed Bonus payments shall be pro rated until July 11 of such
year. Guaranteed Bonus payments will be made to the Employee semi-
annually provided the Employee remains employed through the
Company's applicable fiscal year and is still employed on the
payment date of the Guaranteed Bonus Payment. During the Term, the
Employee shall also be paid such amounts, if any, to which the
Employee is entitled, as an officer of the Company, under the
Company's Cash Incentive Plan (the "Incentive Plan") participating
at award opportunity level C, as from time to time such Incentive
Plan may be amended; provided, however that any amounts to which
the Employee is entitled under the Incentive Plan with respect to
the fiscal years ending January 28, 1995, February 3, 1996 and
February 1, 1997 shall be reduced by the amount of the Guaranteed
Bonus Payment received by the Employee for such fiscal year.
4. Other Benefits.
(a) Fringe Benefits. The Employee shall be entitled to
participate in all benefit programs that the Company establishes
and makes available to management generally and in any event shall
be entitled to receive benefits at least substantially comparable
to those provided pursuant to the present practices of the Company
and its subsidiaries.
(b) Paid Vacations. The Employee shall be entitled to
an annual paid vacation of three weeks in each calendar year, to be
taken at such time or times as the Employee and the Company shall
mutually agree, provided, however, that no more than two weeks
shall be taken during any three month period unless otherwise
agreed upon by the Company's Chief Executive Officer.
5. Expenses. The Company shall reimburse the Employee for
all reasonable travel, entertainment and other business expenses
incurred or paid by the Employee in performing his duties under
this Agreement upon presentation by the Employee of expense
statements or vouchers and such other supporting information as the
Company may from time to time request, provided, however, that the
amount available for such expenses may be fixed in advance by the
Board after consultation with the Employee. The Company shall also
pay or reimburse the reasonable relocation expenses of the Employee
(consistent with the present policies of the Company) in connection
with a relocation of the Employee's principal residence outside of
the greater Boston area required by the Company pursuant to Section
2 hereof.
6. Effective Date and Term. This Agreement shall become
effective as of the date hereof and the Employee's employment under
this Agreement shall commence on such date and, unless sooner
terminated as provided herein or extended, shall continue for a
term (the "Term") ending on January 26, 1997. The Employee and the
Company have obligations hereunder extending past the Term.
7. Noncompetition.
(a) During the Employee's employment under this
Agreement or otherwise and for a period of two years after the date
of termination of such employment (the "Termination Date"), the
Employee will not, without the express written consent of the
Company, anywhere in the United States or any territory or
possession thereof or in any foreign country in which the Company
was active as of the Termination Date: (i) compete with the
Company or any other entity directly or indirectly controlled by
the Company (each an "Affiliate"), in the Company's Business (as
defined in Section 7(c) hereof); or (ii) otherwise interfere with,
disrupt or attempt to interfere with or disrupt the relationship
between the Company or an Affiliate and any person or business that
was a customer, supplier, lessor, licensor, manufacturer,
contractor, designer or employee of the Company or such Affiliate
on the Termination Date or within two years prior to the
Termination Date.
(b) The term "compete" as used in this Section 7 means
directly or indirectly, or by association with any entity or
business, either as a proprietor, partner, employee, agent,
consultant, director, officer, shareholder (provided that the
Employee may make passive investments in competitive enterprises
the shares of which are listed on a national securities exchange if
the Employee at no time owns directly or indirectly more than 2% of
the outstanding equity ownership of such enterprise) or in any
other capacity or manner (i) to solicit, hire, purchase from, sell
to, rent from, or otherwise conduct business related to the
Company's Business with any party that is a customer or supplier of
the Company or an Affiliate or (ii) operate any retail store or
leased footwear department ("Leased Department") which sells
products related to the Company's Business (as defined in Section
7(c) hereof).
(c) The term "Company's Business" as used in this
Section 7 means the operation of any of the following specialty
retail businesses, as a principal business unit, either alone or in
combination: (i) Leased Departments in discount or mass
merchandising department stores; (ii) retail stores offering
discount or "off price" women's footwear; (iii) retail stores
offering discount or "off price" family footwear; (iv) retail
stores offering casual clothing for "Big and Tall" men; or (v)
retail stores offering primarily work related clothing and uniforms
for medical and laboratory purposes or the mail order catalog sales
thereof. The term shall also include any additional specialty
retail businesses which the Company may acquire subsequent to the
date hereof and which are operated as principal business units of
the Company on the Termination Date.
(d) The term "supplier" as used in this Section 7 shall
mean any party or affiliate of a party from which, on the
Termination Date or within two years prior to the Termination Date,
the Company or an Affiliate purchased products sold by the Company
or an Affiliate or was in contact or actively planning to contact
in connection with the purchase of products sold by the Company or
an Affiliate on or before the Termination Date or which the Company
or an Affiliate was contemplating the sale of at some time after
the Termination Date.
(e) The term "customer" as used in this Section 7 shall
mean any party or affiliate of a party, that on the Termination
Date or within two years prior to the Termination Date, was a
wholesale vendee or prospective wholesale vendee of the Company or
an Affiliate or in connection with whose business the Company or an
Affiliate operated a Leased Department, a retail store for the sale
of discount or "off price" women's footwear, discount or "off
price" family footwear, casual clothing for "Big and Tall" men,
work related clothing and uniforms for medical and laboratory
purposes or any other specialty retail business which the Company
operated as a principal business unit on the Termination Date, had
contacted in connection with the potential operation of such
businesses within two years prior to the Termination Date or which
the Company or an Affiliate was actively planning to contact in
connection with the potential operation of any such businesses on
the Termination Date.
8. Confidential Information. The Employee will never use
for his own advantage or disclose any proprietary or confidential
information relating to the business operations or properties of
the Company, any Affiliate or any of their respective customers,
suppliers, landlords, licensors or licensees. Upon termination of
the Employee's employment, the Employee will surrender and deliver
to the Company all documents and information of every kind relating
to or connected with the Company and Affiliates and their
respective businesses, customers, suppliers, landlords, licensors
and licensees.
9. Termination.
(a) Death. In any event of the death of the Employee
during the Term, his employment shall terminate and the Company
shall pay to the Employee's surviving spouse, or to the Employee's
estate if their is no surviving spouse, (i) the Employee's base
salary for one year from the date of death, and (ii) amounts under
the Incentive Plan, if any, payable with respect to the fiscal year
in which his death occurs which otherwise would have been paid to
the Employee on the basis of the results for such fiscal year,
prorated to the date of his death. Upon the death of the Employee,
the rights of the Employee's surviving spouse or estate hereunder,
as the case may be, shall be limited solely to the benefits set
forth in this Section 9(a).
(b) Disability. In the event that the Employee shall
become disabled (as hereinafter defined) during the Term, the
Company shall have the right to terminate the Employee's employment
upon written notice, provided, however, that in such event the
Company shall (i) continue to pay the Employee's base salary for
one year from the date such termination occurs, and (ii) pay to the
Employee amounts under the Incentive Plan, if any, which otherwise
would have been paid to the Employee on the basis of the results
for the fiscal year in which such termination occurs, prorated to
the date of such termination. For purposes of this Agreement, the
Employee shall be considered disabled on the date when any physical
or mental illness or other incapacity shall, in the judgment of a
majority of the members of the Board, after consulting with or
being advised by one or more physicians (it being understood that
one of such physicians may be the Employee's physician but that the
Board shall not be bound by his views), have prevented the
performance in a manner reasonably satisfactory to the Company of
the Employees duties under this Agreement for a period of six
consecutive months.
(c) For Cause. The Company may by notice terminate the
Employee's employment at any time for cause, which shall mean (i)
failure by the Employee to cure a material breach of this Agreement
within 15 days after written notice thereof by the Company, (ii)
the continuation after notice by the Company of willful misconduct
by the Employee in the performance of the Employee's duties
hereunder or (iii) the commission by the Employee of an act
constituting a felony. In such event all obligations of the
Company hereunder shall thereupon terminate, including the
obligation to pay any amounts under the Incentive Plan with respect
to the fiscal year in which such termination occurs, but the
Employee shall be entitled to receive any accrued salary and other
amounts under the Incentive Plan accrued with respect to any prior
fiscal years.
10. Approval of Board. The Company represents that this
Agreement has been duly approved by the Board and is in all
respects valid and binding upon the Company.
11. Key Person Insurance. The Employee agrees to take such
actions as may be reasonably required to permit the Company to
maintain key person life insurance on the Employee's life in such
amounts and for such periods of time, if any, as the Company deems
appropriate, with all benefits being payable to the Company. Upon
payment by the Employee of the cash surrender value, if any, of any
such policy and any paid but unearned premiums for such policy, the
Company will assign such policy to the Employee upon termination
(other than because of the Employee's death) of the Employee's
employment with the Company, provided, however, that, in the event
the Employee's employment is terminated by reason of the disability
of the Employee and the death of the Employee may reasonably be
expected within one year after such termination as a result of such
disability, the Company shall not be required to assign any such
policy.
12. Notices. Any notice or other communication required or
permitted to be given hereunder shall be in writing and shall be
deemed to have been given and received when actually delivered, one
business day after dispatch by telegraphic means, two business days
after dispatch by recognized overnight delivery service, or five
days after mailing by certified or registered mail with proper
postage affixed, return receipt requested and addressed as follows
(or to such other address as a party entitled to receive notice
hereunder may have designated by notice pursuant to this Section
12):
(a) If to the Company:
J. Baker, Inc.
555 Turnpike Street
Canton, Massachusetts 02021
Attention: President
(b) If to the Employee:
James D. Lee
90 Far Reach Road
Westwood, MA 02090
13. Severability. If any provision of this Agreement or its
application to any person or circumstances is invalid or
unenforceable, then the remainder of this Agreement or the
application of such provision to other persons or circumstances
shall not be affected thereby. Further, if any provision or
application hereof is invalid or unenforceable, then a suitable and
equitable provision shall be substituted therefor in order to carry
out so far as may be valid or enforceable the intent and purposes
of the invalid and unenforceable provision.
14. Applicable Law. This Agreement shall be interpreted and
construed in accordance with, and shall be governed by, the laws of
the Commonwealth of Massachusetts without giving effect to the
conflict of law provisions thereof.
15. Assignment. Neither of the parties hereto shall, without
the written consent of the other, assign or transfer this Agreement
or any rights or obligations hereunder, provided, however, that in
the event that the Company sells all or substantially all of its
assets the Company may assign its rights and transfer its
obligations hereunder to the purchaser of such assets. A merger of
the Company with or into another corporation shall be deemed not to
be an assignment of this Agreement, and, in any such event, this
Agreement shall inure to the benefit of and be binding upon the
surviving corporation and the Employee. Subject to the foregoing,
this Agreement shall be binding upon, and shall inure to the
benefit of, the parties and their respective successors, heirs,
administrators, executors, personal representatives and assigns.
16. Headings. This section and paragraph headings contained
in this Agreement are for convenience of reference only and shall
not affect in any way the meaning or interpretation of this
Agreement.
17. Remedies. It is specifically understood and agreed that
any breach of the provisions of Section 7 or 8 of this Agreement is
likely to result in irreparable injury to the Company, that damages
at law will be inadequate remedy for such breach, and that in
addition to any other remedy it may have, the Company shall be
entitled to enforce the specific performance of said Sections and
to seek both temporary and permanent injunctive relief therefor
without the necessity of proving actual damages.
18. Waiver of Breach. Any waiver by either the Company or
the Employee of a breach of any provision of this Agreement shall
not operate or be construed as a waiver of any subsequent breach.
19. Amendment of Agreement. This Agreement may be altered,
amended or modified, in whole or in part, only by a writing signed
by both the Employee and the Company.
20. Integration. This Agreement constitutes the entire
agreement between the parties with respect to the subject matter
thereof and supersedes all prior agreements with respect to such
subject matter between the parties.
Intending to be legally bound, the Company and the Employee
have signed this Agreement as if under seal as of the date set
forth at the head of the first page.
J. BAKER, INC.
/s/ Jerry M. Socol
----------------------
Jerry M. Socol
President
/s/ James D. Lee
-----------------------
James D. Lee
EXHIBIT 10.24
AMENDMENT
TO EMPLOYMENT AGREEMENT
DATED NOVEMBER 1, 1993
Reference is made to the Executive Employment Agreement
dated as of November 1, 1993 (the "Agreement") by and between J.
Baker, Inc. and Stuart Needleman. Pursuant to paragraph 19 of the
Agreement and in order to amend certain provisions of the
Agreement, the Agreement is hereby amended as follows:
1. Paragraph 6 of the Agreement is hereby amended by
deleting the phrase "ending on November 1, 1995" in the fourth
line thereof and inserting in its place the phrase "ending on
April 1, 1996".
2. All other terms of the Agreement shall remain
unchanged and continue in full force and effect.
J. BAKER, INC.
/s/ Jerry M. Socol February 13, 1995
----------------------- ------------------
By: Jerry M. Socol Date
President and
Chief Executive Officer
/s/ Stuart M. Needleman February 13, 1995
----------------------- -----------------
Stuart Needleman Date
EXHIBIT 10.10
AMENDMENT
TO EMPLOYMENT AGREEMENT
DATED MARCH 25, 1993
Reference is made to the Executive Employment Agreement
dated as of March 25, 1993 (the "Agreement") by and between J.
Baker, Inc. and Sherman N. Baker. Pursuant to paragraph 19 of the
Agreement and in order to amend certain provisions of the
Agreement, the Agreement is hereby amended as follows:
1. Paragraph 3(a) of the Agreement entitled
"Compensation" is hereby amended by deleting the figure "$350,000"
in the third line thereof and inserting in its place the figure
"$315,000".
2. Paragraph 6 of the Agreement is hereby amended by
deleting the phrase "ending on April 1, 1995" in the fifth line
thereof and inserting in its place the phrase "ending on April
1, 1996".
3. All other terms of the Agreement shall remain
unchanged and continue in full force and effect.
J. BAKER, INC.
/s/ Jerry M. Socol March 31, 1995
---------------------- ----------------
By: Jerry M. Socol Date
President and
Chief Executive Officer
/s/ Sherman N. Baker March 31, 1995
------------------- ----------------
Sherman N. Baker Date
EXHIBIT 11
J. BAKER, INC. AND SUBSIDIARIES
Computation of Primary and Fully Diluted Earnings Per Share*
<TABLE>
Quarter Ended Year Ended
January 28, January 29, January 28, January 29,
1995 1994 1995 1994
----------- ----------- ----------- ----------
PRIMARY:
<S> <C> <C> <C> <C>
Net Earnings $6,692,957 $7,957,437 $23,616,171 $23,311,042
========== ========== =========== ===========
Weighted average number of
common shares outstanding 13,840,534 13,769,260 13,831,552 13,674,553
========== ========== =========== ===========
Earnings Per Share $0.484 $0.578 $1.707 $1.704
========== ========== =========== ===========
ASSUMING FULL DILUTION:
Net Earnings(1) $7,476,957 $8,741,437 $26,752,171 $26,447,042
========== ========== =========== ===========
Weighted average number of
common shares outstanding 13,840,534 13,769,260 13,831,552 13,674,553
Dilutive effect of outstanding
stock options and
warrants 152,826 212,246 190,405 270,629
Dilutive effect of convertible
subordinated debt 4,341,085 4,341,085 4,341,085 4,341,085
---------- ---------- ---------- ----------
Weighted average number of
common shares as adjusted 18,334,445 18,322,591 18,363,042 18,286,267
========== ========== ========== ==========
Earnings Per Share $0.408 $0.477 $1.457 $1.446
========== ========== ========== ==========
</TABLE>
(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.
EXHIBIT 12
J. BAKER, INC. AND SUBSIDIARIES
Computation of Ratio of Earnings to Fixed Charges
(Dollars in thousands)
<TABLE>
Fiscal Years Ended
----------------------------------------------------------
February 2, February 1, January 30, January 29, January 28,
1991 1992 1993 1994 1995
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Historical ratio of earnings to fixed charges
Earnings from continuing operations before
taxes and extraordinary item per
consolidated statements of earnings $11,307 $12,898 $21,076 $36,424 $36,899
Add:
Portion of rents representative of the
interest factor 2,973 5,459 6,564 15,227 17,593
Interest on indebtedness including the
amortization of debt expense and
detachable warrant value 10,405 10,352 8,211 8,146 9,735
------- ------- ------ ------
Earnings before fixed charges, as adjusted $24,685 $28,709 $35,851 $59,797 $64,227
======= ======= ======= ======= =======
Fixed charges
Interest on indebtedness including the
amortization of debt expense and
detachable warrant value (1) $ 10,405 $ 10,352 $ 8,211 $ 8,146 $ 9,735
------- ------- ------- ------- -------
Rents $ 8,920 $ 16,376 $ 19,691 $ 45,680 $ 52,780
Portion of rents representative of
the interest factor (2) $ 2,973 $ 5,459 $ 6,564 $ 15,227 $ 17,593
------- -------- ------- ------- -------
Fixed charges (1) + (2) $ 13,378 $ 15,811 $ 14,775 $ 23,373 $ 27,328
======== ======== ======== ========
Ratio of earnings to fixed charges 1.85x 1.82x 2.43x 2.56x 2.35x
======= ======= ======= ======= =======
</TABLE>
EXHIBIT 22
SUBSIDIARIES OF THE REGISTRANT
<TABLE>
<S> <C> <C>
State or other
Jurisdiction Name under which
Name of Incorporation Business is done
- ----------- ---------------- -----------------
JBI, Inc. Massachusetts JBI, Inc.
J. Baker, Inc.
Parade of Shoes
Shoe Corporation of
America
JBI Holding Company, Inc.* Delaware JBI Holding Company, Inc.
Morse Shoe, Inc.* Delaware Fayva
Morse Shoe, Inc.
Spencer Companies, Inc. Massachusetts Spencer Companies, Inc.
The Casual Male, Inc. Massachusetts Casual Male Big &
Tall
TCM Holding Company, Inc** Delaware TCM Holding Company, Inc.
WGS Corp. Massachusetts Work 'n Gear
</TABLE>
* Subsidiaries of JBI, Inc.
** Subsidiary of The Casual Male, Inc.
EXHIBIT 23
INDEPENDENT AUDITORS' CONSENT
The Board of Directors
J. Baker, Inc.
We consent to the incorporation by reference in Registration
Statements of J. Baker, Inc. on Form S-8 No. 33-10385, No.
33-20302, No. 33-39425, No. 33-59786, No. 33-59788 and No.
33-59790, and on Form S-3 No. 33-51645 of our report dated March
10, 1995 appearing in the Annual Report on Form 10-K of J. Baker,
Inc. for the year ended January 28, 1995.
/s/ KPMG Peat Marwick LLP
-------------------------
KPMG PEAT MARWICK LLP
Boston, Massachusetts
April 25, 1995
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF J. BAKER, INC. FOR THE YEAR ENDED JANUARY 28, 1995,
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> JAN-28-1995
<PERIOD-START> JAN-30-1994
<PERIOD-END> JAN-28-1995
<EXCHANGE-RATE> 1
<CASH> 4,915,491
<SECURITIES> 0
<RECEIVABLES> 25,549,504
<ALLOWANCES> 0
<INVENTORY> 333,686,950
<CURRENT-ASSETS> 374,393,867
<PP&E> 189,337,121
<DEPRECIATION> (58,271,956)
<TOTAL-ASSETS> 578,618,266
<CURRENT-LIABILITIES> 138,269,764
<BONDS> 204,517,835
<COMMON> 6,920,324
0
0
<OTHER-SE> 216,396,581
<TOTAL-LIABILITY-AND-EQUITY> 578,618,266
<SALES> 1,042,978,875
<TOTAL-REVENUES> 1,042,978,875
<CGS> 579,734,911
<TOTAL-COSTS> 579,734,911
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 9,099,635
<INCOME-PRETAX> 36,899,171
<INCOME-TAX> 13,283,000
<INCOME-CONTINUING> 23,616,171
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 23,616,171
<EPS-PRIMARY> 1.71
<EPS-DILUTED> 1.46
</TABLE>
