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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549-1004
FORM 10-Q
Quarterly Report under Section 13 or 15(d) of
the Securities Exchange Act of 1934
For the Quarterly Period Ended Commission File
July 2, 1994 No. 0-17540
MONTGOMERY WARD HOLDING CORP.
(Exact name of registrant as specified in its charter)
DELAWARE 36-3571585
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
One Montgomery Ward Plaza
Chicago, Illinois 60671
(Address of principal executive offices) (Zip Code)
Registrant's Telephone Number Including Area Code:
(312) 467-2000
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or
for such shorter period that the registrant was required to file
such reports), and (2) has been subject to such filing requirements
for the past 90 days. Yes X No .
At July 30, 1994, there were 19,458,423 shares of Class A Common
Stock and 25,000,000 shares of Class B Common Stock of the
Registrant outstanding.
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<PAGE>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements.
INDEX
Page
Montgomery Ward Holding Corp.
Consolidated Statements of Income . . . . . . . . .2
Consolidated Condensed Balance Sheet. . . . . . . .4
Consolidated Statement of Cash Flows. . . . . . . .5
Notes to Consolidated Condensed Financial
Statements . . . . . . . . . . . . . . . . . . . .7
<PAGE>
MONTGOMERY WARD HOLDING CORP.
CONSOLIDATED STATEMENT OF INCOME
(Millions of dollars, except per share amounts)
For the 13-Week
Period Ended
July 2, July 3,
1994 1993
Revenues
Net sales, including leased and licensed
department sales . . . . . . . . . . . . . . $1,520 $1,284
Direct response marketing revenues,
including insurance. . . . . . . . . . . . . 113 99
Total Revenues . . . . . . . . . . . . . . 1,633 1,383
Costs and Expenses
Cost of goods sold, including net occupancy
and buying expense . . . . . . . . . . . . . 1,183 964
Benefits, losses and expenses of direct
response operations. . . . . . . . . . . . . 84 73
Operating, selling, general and
administrative expenses. . . . . . . . . . . 312 291
Interest expense, net of investment
income . . . . . . . . . . . . . . . . . . . 14 12
Total Costs and Expenses . . . . . . . . . 1,593 1,340
Income Before Income Taxes . . . . . . . . . . 40 43
Income Tax Expense . . . . . . . . . . . . . . 12 16
Net Income . . . . . . . . . . . . . . . . . . 28 27
Preferred Stock Dividend Requirements. . . . . 1 -
Net Income Applicable to
Common Shareholders . . . . . . . . . . . . .$ 27 $ 27
Net Income per Common Share
Class A . . . . . . . . . . . . . . . . . . .$ .62 $ .61
Class B . . . . . . . . . . . . . . . . . . .$ .53 $ .56
Cash Dividends Declared Per Common Share
Class A . . . . . . . . . . . . . . . . . . .$ .50 $ -
Class B . . . . . . . . . . . . . . . . . . .$ .50 $ -
See notes to consolidated condensed financial statements.
<PAGE>
MONTGOMERY WARD HOLDING CORP.
CONSOLIDATED STATEMENT OF INCOME
(Millions of dollars, except per share amounts)
For the 26-Week
Period Ended
July 2, July 27,
1994 1993
Revenues
Net sales, including leased and licensed
department sales . . . . . . . . . . . . . . $2,736 $2,440
Direct response marketing revenues,
including insurance. . . . . . . . . . . . . 220 196
Total Revenues . . . . . . . . . . . . . . 2,956 2,636
Costs and Expenses
Cost of goods sold, including net occupancy
and buying expense . . . . . . . . . . . . . 2,113 1,836
Benefits, losses and expenses of direct
response operations. . . . . . . . . . . . . 165 146
Operating, selling, general and
administrative expenses. . . . . . . . . . . 597 575
Interest expense, net of investment
income . . . . . . . . . . . . . . . . . . . 25 21
Total Costs and Expenses . . . . . . . . . 2,900 2,578
Income Before Income Taxes . . . . . . . . . . 56 58
Income Tax Expense . . . . . . . . . . . . . . 18 21
Net Income . . . . . . . . . . . . . . . . . . 38 37
Preferred Stock Dividend Requirements. . . . . 1 -
Net Income Applicable to
Common Shareholders . . . . . . . . . . . . .$ 37 $ 37
Net Income per Class A Common Share. . . . . . $ .85 $ .81
Net Income per Class B Common Share. . . . . . $ .74 $ .75
Cash Dividends Declared Per Common Share
Class A . . . . . . . . . . . . . . . . . . . $ .50 $ -
Class B . . . . . . . . . . . . . . . . . . . $ .50 $ -
See notes to consolidated condensed financial statements.
<PAGE>
MONTGOMERY WARD HOLDING CORP.
CONSOLIDATED CONDENSED BALANCE SHEET
(Millions of dollars)
ASSETS
July 2, January 1,
1994 1994
Cash and cash equivalents . . . . . . . . . $ 30 $ 98
Short-term investments . . . . . . . . . . . 6 19
Investments of insurance operations. . . . . 299 296
Total Cash and Investments . . . . . . . 335 413
Trade and other accounts receivable. . . . . 94 62
Accounts and notes receivable
from affiliates . . . . . . . . . . . . . . 19 4
Total Receivables. . . . . . . . . . . . 113 66
Merchandise inventories. . . . . . . . . . . 1,416 1,242
Prepaid pension contribution . . . . . . . . 317 310
Properties, plants and equipment, net of
accumulated depreciation and
amortization. . . . . . . . . . . . . . . . 1,313 1,263
Direct response and insurance
acquisition costs . . . . . . . . . . . . . 304 295
Other assets . . . . . . . . . . . . . . . . 383 246
Total Assets . . . . . . . . . . . . . . . . $4,181 $3,835
LIABILITIES AND SHAREHOLDERS' EQUITY
Short-term debt. . . . . . . . . . . . . . . $ 316 $ -
Trade accounts payable . . . . . . . . . . . 1,186 1,358
Accrued liabilities and other
obligations . . . . . . . . . . . . . . . . 1,142 1,197
Federal income taxes payable . . . . . . . . 13 7
Insurance policy claim reserves. . . . . . . 234 237
Long-term debt . . . . . . . . . . . . . . . 401 213
Obligations under capital leases . . . . . . 85 89
Deferred federal income taxes. . . . . . . . 109 127
Total Liabilities. . . . . . . . . . . . 3,486 3,228
Redeemable Preferred Stock . . . . . . . . . 75 -
Shareholders' Equity
Common stock. . . . . . . . . . . . . . . . - -
Capital in excess of par value. . . . . . . 20 19
Retained earnings . . . . . . . . . . . . . 673 658
Unrealized gain on marketable equity
securities . . . . . . . . . . . . . . . . 7 3
Less: Treasury stock, at cost. . . . . . . (80) (73)
Total Shareholders' Equity . . . . . . . 620 607
Total Liabilities and
Shareholders' Equity. . . . . . . . . . . . $4,181 $3,835
See notes to consolidated condensed financial statements.
<PAGE>
MONTGOMERY WARD HOLDING CORP.
CONSOLIDATED STATEMENT OF CASH FLOWS
(Millions of dollars)
For the 26-Week
Period Ended
July 2, July 3,
1994 1993
Cash flows from operating activities:
Net income . . . . . . . . . . . . . . . . .$ 38 $ 37
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation and amortization. . . . . . . 51 50
Deferred income taxes. . . . . . . . . . . (4) (9)
Changes in operating assets and liabilities:
(Increase) decrease in:
Trade and other accounts receivable. . . . (20) (13)
Accounts and notes receivable from
affiliates. . . . . . . . . . . . . . . . (15) 4
Merchandise inventories. . . . . . . . . . (35) (86)
Prepaid pension contribution . . . . . . . (7) (6)
Other assets . . . . . . . . . . . . . . . (21) (26)
Increase (decrease) in:
Trade accounts payable . . . . . . . . . . (241) (243)
Federal income taxes payable, net. . . . . 8 10
Accrued liabilities and other
obligations . . . . . . . . . . . . . . . (120) (56)
Insurance policy claim reserves. . . . . . (3) (2)
Net cash used in operations . . . . . . . (369) (340)
Cash flows from investing activities:
Acquisition of Lechmere, net of cash
acquired . . . . . . . . . . . . . . . . . . (109) -
Purchase of short-term investments. . . . . . (130) (112)
Purchase of investments of insurance
operations . . . . . . . . . . . . . . . . . (295) (264)
Sale of short-term investments. . . . . . . . 143 101
Sale of investments of insurance
operations . . . . . . . . . . . . . . . . . 298 265
Capital expenditures. . . . . . . . . . . . . (42) (40)
Disposition of properties, plants and
equipment, net . . . . . . . . . . . . . . . 1 2
Sale of assets held for disposition . . . . . - 3
Net cash used for
investing activities . . . . . . . . . .$(134) $ (45)
See notes to consolidated condensed financial statements.
<PAGE>
MONTGOMERY WARD HOLDING CORP.
CONSOLIDATED STATEMENT OF CASH FLOWS
(Millions of dollars)
For the 26-Week
Period Ended
July 2, July 3,
1994 1993
Cash flows from financing activities:
Proceeds from short-term borrowings . . . . . $3,253 $3,371
Payments on short-term borrowings . . . . . . (2,937) (3,107)
Proceeds from issuance of
long-term debt . . . . . . . . . . . . . . . 166 100
Payments of Montgomery Ward
long-term debt . . . . . . . . . . . . . . . (4) (4)
Payments of Lechmere
long-term debt . . . . . . . . . . . . . . . (88) -
Payments of obligations under
capital leases . . . . . . . . . . . . . . . (4) (3)
Proceeds from issuance of
Common Stock . . . . . . . . . . . . . . . . 1 -
Proceeds from issuance of
Preferred Stock. . . . . . . . . . . . . . . 75 -
Cash dividends paid . . . . . . . . . . . . . (23) -
Purchase of treasury stock, at cost . . . . . (4) (6)
Net cash provided by
financing activities. . . . . . . . . . . 435 351
Decrease in cash and cash equivalents. . . . . (68) (34)
Cash and cash equivalents at
beginning of period . . . . . . . . . . . . . 98 81
Cash and cash equivalents at
end of period . . . . . . . . . . . . . . . . $ 30 $ 47
Supplemental disclosure of cash flow
information:
Cash paid during the period for:
Income taxes . . . . . . . . . . . . . . . $ 19 $ 18
Interest . . . . . . . . . . . . . . . . . $ 24 $ 18
Non-cash financing activity:
Notes issued for purchase of
Treasury stock . . . . . . . . . . . . . . . $ 3 $ -
Non-cash investing activity:
Change in unrealized gain on
marketable equity securities . . . . . . . . $ 4 $ -
See notes to consolidated condensed financial statements.
<PAGE>
MONTGOMERY WARD HOLDING CORP.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Millions of dollars, except per share amounts)
1. Condensed Financial Statements
Montgomery Ward Holding Corp. (the Company or MW Holding)
conducts its operations through its only direct subsidiary,
Montgomery Ward & Co., Incorporated (Montgomery Ward). In the
opinion of management, the unaudited financial statements of the
Company include all adjustments necessary for a fair presentation.
All such adjustments are of a normal recurring nature. The
condensed financial statements should be read in the context of the
financial statements and notes thereto filed with the Securities
and Exchange Commission in MW Holding's 1993 Annual Report on Form
10-K. Certain prior period amounts have been reclassified to be
comparable with the current period presentation.
Effective January 2, 1994, the Company adopted Statement of
Financial Accounting Standards No. 115, "Accounting for Certain
Investments in Debt and Equity Securities" (FAS No. 115). Under
FAS No. 115, all debt securities are classified as "available-for-
sale" and are stated at fair market value with all changes in
unrealized gains or losses included in Shareholder's Equity. The
adoption of FAS No. 115 increased Investments of insurance
operations by $17, Deferred income taxes by $6 and Unrealized gain
on equity securities by $11 as of January 2, 1994 and had no impact
on the results of operations of the Company.
2. Net Income Per Common Share
Net income per common share is computed as follows:
13-Week Period Ended
July 2, 1994
Class A Class B
Earnings available for Common
Shareholders . . . . . . . . . . . $13 $14
Weighted average number of common
and common equivalent shares
(stock options) outstanding. . . . 21,395,584 25,000,000
Earnings per share. . . . . . . . . $.62 $.53
13-Week Period Ended
July 3, 1993
Class A Class B
Earnings available for
Common Shareholders after
deducting preferred stock
dividend requirements. . . . . . . $13 $14
Weighted average number of common
and common equivalent shares
(stock options) outstanding. . . . 21,747,265 25,000,000
Earnings per share. . . . . . . . . $ .61 $ .56
<PAGE>
MONTGOMERY WARD HOLDING CORP.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Millions of dollars, except per share amounts)
2. Net Income Per Common Share (continued)
Net income per common share is computed as follows:
26-Week Period Ended
July 2, 1994
Class A Class B
Earnings available for Common
Shareholders . . . . . . . . . . . $18 $19
Weighted average number of common
and common equivalent shares
(stock options) outstanding. . . . 21,514,129 25,000,000
Earnings per share. . . . . . . . . $.85 $.74
26-Week Period Ended
July 3, 1993
Class A Class B
Earnings available for
Common Shareholders. . . . . . . . $18 $19
Weighted average number of common
and common equivalent shares
(stock options) outstanding. . . . 22,109,940 25,000,000
Earnings per share. . . . . . . . . $.81 $.75
3. Acquisition of Lechmere, Inc.
Montgomery Ward acquired in a merger transaction all the stock
of LMR Acquisition Corporation (LMR) which owns 100% of the stock
of Lechmere, Inc. (Lechmere) on March 30, 1994. The aggregate
purchase price was comprised of an estimated price of $113 and a
contingent purchase price payable in 1995 of up to $20 in cash and
the issuance of up to 400,000 shares of Class A Common Stock,
Series 1 (or at the option of Montgomery Ward, up to 400,000 shares
of Class A Common Stock, Series 3). The exact amount, if any, of
the contingent price to be paid is dependent on Lechmere achieving
or exceeding a specified gross margin amount during the period
commencing February 27, 1994 and ending February 25, 1995.
<PAGE>
MONTGOMERY WARD HOLDING CORP.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Millions of dollars, except per share amounts)
3. Acquisition of Lechmere, Inc. (continued)
The closing price included a $10 promissory note (the Note) of
Montgomery Ward, which bears interest at a rate of 4.87% per annum.
Seventy-five percent of the accrued interest on and principal of
the Note are payable 540 days after the date of the Note and the
balance is payable three years after the date of the Note. The
Note, which is secured by a standby letter of credit, is to be
reduced upon the occurrence of certain specified circumstances.
As part of the closing, Montgomery Ward advanced approximately
$88 and assumed $3 in obligations to enable Lechmere to retire its
outstanding bank debt and subordinated debt.
The acquisition was accounted for as a purchase. The purchase
price has been allocated to Lechmere's net assets based upon
preliminary results of asset valuations and liability and
contingency assessments. Actual adjustments may differ based on
the results of further evaluations of the fair value of the
acquired assets and liabilities. Any differences between
preliminary and actual adjustments are not expected to have a
material impact on the consolidated financial statements.
The preliminary allocation is summarized as follows:
Inventory. . . . . . . . . . . . . . . . . . . . . . . . $140
Properties, Plants and Equipment . . . . . . . . . . . . 60
Goodwill . . . . . . . . . . . . . . . . . . . . . . . . 119
Other Assets . . . . . . . . . . . . . . . . . . . . . . 21
Due to Montgomery Ward . . . . . . . . . . . . . . . . . (88)
Accounts Payable and Other Liabilities . . . . . . . . .(139)
$113
4. Senior Preferred Stock
On April 27, 1994, the Company issued 750 shares of a new series
of Senior Preferred Stock (Senior Preferred Stock) to GE Capital in
exchange for $75 in cash. The Company used the proceeds to acquire
750 shares of a new issue of Senior Preferred Stock of Montgomery
Ward (Montgomery Ward Preferred) for $75 and Montgomery Ward used
the proceeds to reduce short-term borrowings.
Holders of the Senior Preferred Stock are entitled to receive
cumulative cash dividends of $4,850 per share, per annum, in equal
quarterly payments.
<PAGE>
MONTGOMERY WARD HOLDING CORP.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Millions of dollars, except per share amounts)
4. Senior Preferred Stock (continued)
The Company may, upon 10 days notice, redeem the Senior
Preferred Stock at a price of $100,000 per share. On or after
April 28, 1999, upon four months written notice by the holders, the
Company is required to redeem the Senior Preferred Stock at a price
of $100,000 per share.
5. Common Stock
At the Company's annual meeting of stockholders on May 20, 1994,
the stockholders of the Company approved an amendment to the
Company's Certificate of Incorporation authorizing the issuance of
400,000 shares of Class A Common Stock, Series 3. None of the
Series 3 Stock is presently issued or outstanding.
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations
The following discussion and analysis of results of operations
for MW Holding compares the second quarter of 1994 to the second
quarter of 1993, as well as the first six months of 1994 to the
first six months of 1993. All dollar amounts referred to in this
discussion are in millions, and all income and expense items are
shown before income taxes, unless specifically stated otherwise.
MW Holding's business is seasonal, with one-third of the sales
traditionally occurring in the fourth quarter; accordingly, the
results of operations for the quarter and the first six months are
not necessarily indicative of the results for the entire year.
Results of Operations
Second Quarter 1994 Compared with Second Quarter 1994
Net income for the second quarter of 1994 was $28, an increase
of $1 from the prior year. Net income for the period included a
loss from operations of Lechmere. In addition, the Company
reported a favorable income tax adjustment of $3. Preferred stock
dividend requirements were $1 for the second quarter due to the
issuance of Senior Preferred Stock on April 27, 1994.
<PAGE>
MONTGOMERY WARD HOLDING CORP.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Millions of dollars)
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations
Results of Operations
Second Quarter 1994 Compared with Second Quarter 1993 (continued)
Consolidated total revenues (net sales and direct response
marketing revenues, including insurance) were $1,633 compared with
$1,383 in 1993. Net sales increased $236, or 18% of which $181 was
attributable to Lechmere, which was acquired on March 30, 1994.
Excluding Lechmere, net sales increased 4% while comparable store
sales increased 3%. Apparel sales experienced an increase of only
1% due to the shift of pre-Easter sales to the first quarter of
1994. Hardlines sales increased 7% for the second quarter.
Direct response marketing revenues increased $14, or 14%, to
$113. The increase was primarily due to increased club membership
levels. The acquisition of Smilesaver in April, 1994 accounted for
an increase of $2 in dental club revenues.
Gross margin (net sales less cost of goods sold) dollars,
including Lechmere, were $337, an increase of $17, or 5%, from the
second quarter of last year. The increase in gross margin was due
to the sales increase ($68), offset by a decrease in the gross
margin rate ($36), increased occupancy costs ($11) and increased
buying and other costs ($4). The decrease in the gross margin rate
was impacted by the lower margin rates of Lechmere and competitive
pressures which continued into July. Benefits, losses and expenses
of direct response operations of $84 increased by $11 over the
second quarter of last year. The increase was primarily due to
increased expenses as a result of increased Club memberships.
Operating, selling, general and administrative expenses,
including Lechmere, increased $21, or 7%, from the prior year.
Excluding Lechmere's expenses, operating, selling, general and
administrative costs decreased by $14. This decrease was due to
decreased expenses as a result of a program to decrease advertising
and other promotional costs of $15, decreased other operating and
administrative expense of $1 and decreased payroll expense of $5.
The decreases were partially offset by the impact of new store
openings of $7.
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations (continued)
Results of Operations (continued)
Second Quarter 1994 Compared with Second Quarter 1993 (continued)
Net interest expense increased $2, or 17%, from the prior year
due to increased interest expense on borrowings under the Term Loan
Agreement. Borrowings under the Term Loan Agreement were made in
the First Quarter 1994 in connection with the acquisition of
Lechmere and were outstanding for the entire second quarter of
1994.
First Six Months of 1994 Compared with First Six Months of 1993
Consolidated net income was $38, an increase of $1 from the
prior year. Net income for the period included a loss from
operations of Lechmere. In addition, the Company reported a
favorable income tax adjustment of $3. Preferred Stock dividend
requirements were $1 for the first six months of 1994 due to the
issuance of Senior Preferred Stock on April 27, 1994.
Consolidated total revenues were $2,956 compared with $2,636 in
1993. Net sales increased $296, or 12% of which $181 was
attributable to Lechmere, which was acquired on March 30, 1994.
Excluding Lechmere, net sales increased $115 or 5%. Apparel sales
and Hardlines sales experienced increases of 5% for the first six
months. Sales on a comparable store basis, which reflects only the
stores in operation for both the first six months of 1994 and 1993,
increased 3%. Direct response marketing revenues increased $24, or
12%, to $220. The increase was primarily due to increased club
membership levels. The acquisition of Smilesaver in April, 1994
accounted for an increase of $2 in dental club revenues.
Gross margin dollars, including Lechmere, were $623, an increase
of $19, or 3%, from the first six months of last year. The
increase was due to the gross margin impact of the increase in
sales ($89), offset by a decreased gross margin rate ($52),
increased occupancy costs ($14), and increased buying office and
other expenses ($4). As discussed previously, the decrease in the
gross margin rate was impacted by the lower margin rates of
Lechmere and competitive pressures. Benefits, losses and expenses
of direct response operations increased $19, or 13% over the first
six months of last year. The increase was primarily due to
increased costs as a result of increased club memberships.
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations (continued)
Results of Operations (continued)
First Six Months of 1994 Compared with First Six Months of 1993
(continued)
Operating, selling, general and administrative expenses,
including Lechmere, increased $22, or 4%, from the prior year.
Excluding Lechmere's expenses, operating, selling, general and
administrative expenses decreased by $13. This decrease was due to
decreased advertising and other promotional costs of $19, decreased
payroll of $10 and decreased operating and other administrative
expenses of $2. These decreases were partially offset by the
impact of new store openings of $18.
Net interest expense increased $4, or 19%, from the prior year
due to increased interest expense on borrowings under the Note
Purchase Agreements and Term Loan Agreement. The Note Purchase
borrowings were outstanding for the entire first six months of 1994
as compared to a portion of the first six months of 1993. The
borrowings under the Term Loan Agreement have been outstanding
since the first quarter of 1994.
Discussion of Financial Condition
Montgomery Ward is the only direct subsidiary of MW Holding and
therefore Montgomery Ward and its subsidiaries are MW Holding's
sole source of funds.
On April 27, 1994, the Company issued 750 shares of a new series
of Senior Preferred Stock (Senior Preferred Stock) to GE Capital in
exchange for $75 in cash. The Company used the proceeds to acquire
750 shares of a new issue of Senior Preferred Stock of Montgomery
Ward (Montgomery Ward Preferred) for $75 and Montgomery Ward used
the proceeds to reduce short-term borrowings.
During the first quarter of 1994, Montgomery Ward borrowed the
entire $165 available under a Term Loan Agreement dated as of
November 24, 1993 with various banks (Term Loan Agreement).
Borrowings under the Term Loan Agreement are payable upon the fifth
anniversary of the Term Loan Agreement and under the same interest
rate options as the Restated Credit Agreement (as defined below).
This loan was used to partially finance the acquisition of Lechmere
as discussed below. As of July 2, 1994, $165 was outstanding under
the Term Loan Agreement.
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations (continued)
Discussion of Financial Condition (continued)
Montgomery Ward has entered into an Amended and Restated Credit
Agreement dated as of September 22, 1992, as amended (Restated
Credit Agreement) with various lenders. The Restated Credit
Agreement, which expires September 23, 1996 provides for a
revolving facility in the principal amount of $350. As of July 2,
1994, $216 is outstanding under the Restated Credit Agreement.
Concurrently, Montgomery Ward also entered into a Short Term Credit
Agreement dated as of September 22, 1992, as amended (Short Term
Agreement) with various lenders. The Short Term Agreement, which
expires September 22, 1994, provides for a revolving facility in
the principal amount of $200. As of July 2, 1994, $100 is
outstanding under the Short Term Agreement. Such borrowings have
been used for working capital purposes and to partially finance the
acquisition of Lechmere. The aforementioned borrowings are
unsecured.
The Restated Credit Agreement, the Short Term Agreement, the
Term Loan Agreement (collectively, the Agreements) and the Note
Purchase Agreements impose various restrictions on Montgomery Ward,
including the satisfaction of certain financial tests which include
restrictions on payment of dividends. Under the terms of the
Agreements, which are currently the most restrictive of the
financing agreements as to dividends, distributions and
redemptions, Montgomery Ward may not pay dividends or make
any other distributions to the Company or redeem any common
stock in excess of (1) $50 on a cumulative basis, plus (2) 50% of
Consolidated Net Income of Montgomery Ward (as defined in the
Agreements) after December 28, 1991, plus (3) $90, which represents
a distribution made by Montgomery Ward for the purpose of redeeming
the preferred stock of the Company on September 30, 1992, plus (4)
capital contributions received by Montgomery Ward after December
28, 1991, plus (5) net proceeds received by Montgomery Ward from
(a) the issuance of capital stock including treasury stock but
excluding Debt-like Preferred Stock (as defined in the Agreements),
or (b) any indebtedness which is converted into shares of capital
stock other than Debt-like Preferred Stock, after December 28,
1991, plus (6) an adjustment of $45 for 1994 through 1996, $30 in
1997 and $15 in 1998. The Montgomery Ward Preferred discussed
previously constitutes Debt-like Preferred Stock for purposes of
the dividend restrictions under the Agreements.
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations (continued)
Discussion of Financial Condition (continued)
Montgomery Ward acquired in a merger transaction all the stock
of LMR Acquisition Corporation (LMR) which owns 100% of the stock
of Lechmere, Inc. (Lechmere) on March 30, 1994. The aggregate
purchase price was comprised of an estimated price of $113 and a
contingent purchase price payable in 1995 of up to $20 in cash and
the issuance of up to 400,000 shares of Class A Common Stock,
Series 1 (or at the option of Montgomery Ward, up to 400,000 shares
of Class A Common Stock, Series 3). The exact amount, if any, of
the contingent price to be paid is dependent on Lechmere achieving
or exceeding a specified gross margin amount during the period
commencing February 27, 1994 and ending February 25, 1995.
The closing price included a $10 promissory note (the Note) of
Montgomery Ward, which bears interest at a rate of 4.87% per annum.
Seventy-five percent of the accrued interest on and principal of
the Note are payable 540 days after the date of the Note and the
balance is payable three years after the date of the Note. The
Note, which is secured by a standby letter of credit, is to be
reduced upon the occurrence of certain specified circumstances.
As part of the closing, Montgomery Ward advanced approximately
$88 and assumed $3 of obligations to enable Lechmere to retire its
outstanding bank debt and subordinated debt. The purchase of and
advances to Lechmere were financed by the proceeds from borrowings
under the Agreements.
Future cash needs are expected to be provided by ongoing
operations, the sale of customer receivables to Montgomery Ward
Credit Corporation, a subsidiary of GE Capital (Montgomery Ward
Credit), pursuant to the Account Purchase Agreement with Montgomery
Ward Credit, borrowings under the Restated Credit Agreement and the
Short Term Agreement and the disposition of capital assets related
to facility closings.
Capital expenditures during the first six months of 1994 of $42
were primarily related to expenditures for opening one retail
outlet and various merchandise fixture and presentation programs.
Capital expenditures for the comparable 1993 period were $40.
The Board of Directors declared a cash dividend of fifty cents
per share for a total of $22 on May 20, 1994 to shareholders of
record on June 15, 1994. This dividend was paid on June 23, 1994.
<PAGE>
PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
None.
Item 2. Changes in Securities.
A. Senior Preferred Stock
On April 27, 1994, the Company's Certificate of
Incorporation was amended to authorize the issuance of a new
series of senior preferred stock (the "Senior Preferred
Stock"). On that date, the Company issued all of the 750
shares of Senior Preferred Stock authorized by the
Certificate of Incorporation to General Electric Capital
Corporation in exchange for $74,812,500 in cash.
Except as required by law, holders of Senior Preferred
Stock will not have any voting rights, other than the right
to elect one director to be an additional member of the
Company's Board of Directors (a) during the period following
a default in the payment of accrued dividends on the Senior
Preferred Stock for four consecutive quarters until such
accrued dividends shall have been paid in full and (b) during
the period following any failure to make a mandatory
redemption of Senior Preferred Stock (as described below)
until such failure shall have been cured.
Holders of Senior Preferred Stock are entitled to receive,
before any dividends may be declared and paid upon or set
aside for Common Stock of the Company, cumulative cash
dividends of $4,850 per share per annum, in equal quarterly
payments on the last business day of March, June, September
and December. Dividend payments with respect to the Senior
Preferred Stock may be made only in cash. No dividends may
be declared or paid on the Senior Preferred Stock when such
declaration or payment would constitute a default under any
agreements governing indebtedness for borrowed money of the
Company and its direct and indirect subsidiaries
("Agreements").
The Company may, upon ten business days notice to the
holders thereof, at any time redeem the whole or any part of
the Senior Preferred Stock at a price of $100,000 per share
plus unpaid accrued dividends thereon. No such redemption
may be made when such redemption would constitute a default
under any Agreements.
<PAGE>
PART II - OTHER INFORMATION (Continued)
Item 2. Changes in Securities. (continued)
A. Senior Preferred Stock (continued)
On or after April 28, 1999, the Company is required to
redeem from time to time all or any portion of the Senior
Preferred Stock at a redemption price of $100,000 per share
plus unpaid accrued dividends thereon, upon four months
written notice by the holders of a majority of the Senior
Preferred Stock then outstanding. No such redemption may be
made when such redemption would constitute a default under
any of the Agreements.
Upon any liquidation, dissolution or winding up of the
Company, the holders of Senior Preferred Stock shall be
entitled to be paid, before any distributions or payment is
made to any holder of Common Stock of the Company, an amount
in cash equal to $100,000 per share plus unpaid accrued
dividends thereon.
B. Class A Common Stock, Series 3
At the Company's annual meeting of stockholders on May 20,
1994, the stockholders of the Company approved an amendment
to the Company's Certificate of Incorporation authorizing the
issuance of 400,000 shares of Class A Common Stock, Series 3
("Series 3 Stock"). None of the Series 3 Stock is presently
issued or outstanding.
Series 3 Stock will have the same dividend and liquidation
rights as Class A Common Stock, Series 1 and Class A Common
Stock, Series 2. That is, the portion of dividends and
liquidation amounts which is payable to the holders of Class
A Common Stock shall be allocated among such holders in
proportion to their respective holdings of shares of Class A
Common Stock, without distinction as to series.
Specifically, the amendment to the Certificate of
Incorporation provides that dividend and liquidation rights
for shares of Class A Common Stock is to be determined as
follows:
(A) The term "Class A Amount," as used below with respect
to a determination of dividends, shall mean the number equal
to the lesser of 25,000,000 (the "Series 1 Amount") or the
aggregate number of outstanding shares of all series of Class
A Common Stock (the "Outstanding Amount") as of the date of
determination.
<PAGE>
PART II - OTHER INFORMATION (Continued)
Item 2. Changes in Securities. (continued)
B. Class A Common Stock, Series 3 (continued)
(B) The portion of such dividends or proceeds which is
payable to the holders of Class A Common Stock, as a class,
and without distinction as to series, at any time when the
Outstanding Amount does not exceed the Series 1 Amount, shall
be the amount which bears the same ratio to the total amount
of such dividends or proceeds as the Class A Amount bears to
the sum of (A) the Class A Amount, plus (B) the number of
shares of Class B Common Stock outstanding as of the date of
the determination; and such portion of such dividends which
is payable to the holders of the Class A Common Stock shall
be allocated among such holders in proportion to their
respective holdings of shares of Class A Common Stock,
without distinction as to series;
(C) The portion of such dividends or proceeds which is
payable to the holders of Class A Common Stock, as a class,
and without distinction as to series, at any time when the
Outstanding Amount exceeds the Series 1 Amount (but the
Outstanding Amount less the number of shares of Series 3
Stock outstanding (such difference being the "non-Series 3
Outstanding Amount") does not exceed the Series 1 Amount),
shall be the product of the amount which would be payable to
holders of Class A Common Stock if the immediately preceding
paragraph (B) were applicable and the Class A Amount were
equal to the Series 1 Amount multiplied by a fraction, the
numerator of which is the Outstanding Amount and the
denominator of which is the sum of the Series 1 Amount plus
fifty percent (50%) of the excess of the Outstanding Amount
over the Series 1 Amount; and such portion of such dividends
or proceeds which is payable to the holders of Class A Common
Stock shall be allocated among such holders in proportion to
their respective holdings of shares of Class A Common Stock,
without distinction as to series;
(D) The portion of such dividends or proceeds which is
payable to the holders of Class A Common Stock, as a class,
and without distinction as to series, at any time when the
Outstanding Amount exceeds the Series 1 Amount (and paragraph
(C) immediately preceding is not applicable), shall be the
product of (x) the amount which would be payable to holders
of Class A Common Stock if paragraph (B) above were
applicable and the Class A Amount were equal to the Series 1
Amount, multiplied by (y) a fraction, the numerator of which
is the Non-Series 3 outstanding Amount and the denominator
of which is the sum of the Series 1 Amount plus eighty-one
point five percent (81.5%) of the excess of the Non-Series 3
<PAGE>
PART II - OTHER INFORMATION (Continued)
Item 2. Changes in Securities. (continued)
B. Class A Common Stock, Series 3 (continued)
Outstanding Amount over the Series 1 Amount, and multiplied
by (z) a fraction, the numerator of which is the Outstanding
Amount and the denominator of which is the sum of the Non-
Series 3 Outstanding Amount plus fifty percent (50%) of the
number of shares of Series 3 Stock outstanding at such time;
and such portion of such dividends or proceeds which is
payable to the holders of Class A Common Stock shall be
allocated among such holders in proportion to their
respective holdings of shares of Class A Common Stock,
without distinction as to series; and
(E) the portion of such dividends or proceeds which is
payable to the holders of Class B Common Stock shall be the
portion of the total amount of such dividends or proceeds
that is not payable to the holders of Class A Common Stock in
accordance with the foregoing, and such portion of such
dividends or proceeds which is payable to the holders of
Class B Common Stock shall be allocated among such holders in
proportion to their respective holdings of shares of Class B
Common Stock.
All series of Class A Common Stock have the same general
voting rights, which were not affected by the amendment to
the Certificate of Incorporation.
Item 3. Defaults Upon Senior Securities.
None.
Item 4. Submission of Matters to a Vote of Security Holders.
A. Unanimous Consent of Stockholders dated April 27, 1994
By unanimous written consent, in lieu of a special meeting,
on April 27, 1994, the stockholders of the Company authorized
a Certificate of Amendment to the Company's Certificate of
Incorporation authorizing the issuance of a new series of
Senior Preferred Stock of the Company. See Item 2 for a
description of the terms of the Senior Preferred Stock.
<PAGE>
PART II - OTHER INFORMATION (Continued)
Item 4. Submission of Matters to a Vote of Security Holders.
(continued)
B. Annual Meeting of Stockholders on May 20, 1994
On May 20, 1994, the Company held its annual meeting of
stockholders. At the meeting, the following matters were
submitted to a vote of the stockholders, who, in each case,
approved the proposals unanimously with all shares
represented in person or by proxy:
1) the proposal to elect Bernard F. Brennan, Richard
Bergel, Bernard W. Andrews, Spencer H. Heine, Myron
Lieberman, Silas S. Cathcart, David D. Ekedahl, Denis J.
Nayden and James A. Parke as directors of the Company for the
1994 fiscal year;
2) the proposal to approve an amendment and restatement of
the Company's Certificate of Incorporation to (a) eliminate
references to certain preferred stock of the Company no
longer outstanding, (b) eliminate a provision with respect to
compromise of creditors' claims, (c) authorize the issuance
of shares of Class A Common Stock, Series 3 (see Item 2
above) and (d) implement changes to correct and update the
Certificate of Incorporation to reflect prior events and to
reflect conditions as were then in place, including, without
limitation, addition of certain defined terms and cross-
references;
3) the proposal to approve an amendment and restatement of
the Stockholders' Agreement dated as of June 17, 1988 to (a)
eliminate references to certain preferred stock of the
Company no longer outstanding, (b) permit the extension of
certain option periods intended to permit repurchases of
shares without recapture of profits under Section 16(b) of
the Securities Exchange Act of 1934, as amended, (c) reflect
the likelihood that most future parties to the Stockholders'
Agreement will purchase Class A Common Stock in a registered
offering, (d) reflect the authorization of shares of Class A
Common Stock, Series 3 (see Item 2 above) and (e) implement
changes to correct and update the Stockholders' Agreement to
reflect prior events and to reflect conditions as were then
in place, including, without limitation, addition of certain
defined terms and cross-references;
<PAGE>
PART II - OTHER INFORMATION (Continued)
Item 4. Submission of Matters to a Vote of Security Holders.
(continued)
B. Annual Meeting of Stockholders on May 20, 1994 (continued)
4) the proposal to approve an amendment and restatement of
the Montgomery Ward & Co., Incorporated Stock Ownership Plan
Terms and Conditions to (a) eliminate references to certain
preferred stock of the Company no longer outstanding, (b)
permit the extension of certain option periods intended to
permit repurchases of shares without recapture of profits
under Section 16(b) of the Securities Exchange Act of 1934,
as amended, (c) reflect the likelihood that most future
parties to the Terms and Conditions will purchase Class A
Common Stock in a registered offering, (d) reflect the
authorization of shares of Class A Common Stock, Series 3
(see Item 2 above) and (e) implement changes to correct and
update the Terms and Conditions to reflect prior events and
to reflect conditions as were then in place, including,
without limitation, addition of certain defined terms and
cross-references;
5) the proposal to approve amendments to the Montgomery
Ward & Co., Incorporated Stock Ownership Plan to (a) permit
directors of and advisors and consultants to the Company and
its subsidiaries and affiliates to participate in the Stock
Ownership Plan, (b) limit the number of Class A Shares
available to any participant under the Stock Ownership Plan
to 1,000,000 Class A shares, as adjusted, and (c) clarify
certain provisions of the Stock Ownership Plan;
6) the proposal to approve the Senior Executive Performance
Management Program which provides awards to senior executives
of the Company and its subsidiaries based on the achievement
by the Company and its subsidiaries of certain financial
goals;
7) the proposal to approve the Executive Long-Term
Incentive Plan, which provides awards to senior executives of
the Company and its subsidiaries based on the achievement by
the Company and its subsidiaries of certain financial targets
on a rolling three-year basis.
Item 5. Other Information.
None.
<PAGE>
PART II - OTHER INFORMATION (Continued)
Item 6. Exhibits and Reports on Form 8-K.
2.(i)(A)(1) First Amendment to Agreement and Plan of Merger
dated June 15, 1994, by and among Montgomery
Ward & Co., Incorporated, LMR Acquisition
Corporation, and the Stockholders' Committee.
3.2(ii) Certificate of Amendment to Certificate of
Incorporation, filed April 27, 1994,
incorporated by reference to Exhibit 3.2(ii) of
the Company's Registration Statement on Form
S-1 (Registration No. 33-33252).
3.2(iii) Third Restated Certificate of Incorporation of
Registrant, filed June 28, 1994, incorporated
by reference to Exhibit 3.2(iii) of the
Company's Registration Statement on Form S-1
(Registration No. 33-33252).
3.3(i) Amended and Restated By-laws of the Registrant,
dated April 15, 1994, incorporated by reference
to Exhibit 3.3(i) of the Company's Registration
Statement on Form S-1 (Registration No. 33-
33252).
10.(i)(A)(v) Montgomery Ward & Co., Incorporated Stock
Ownership Plan Terms and Conditions, as amended
and restated May 20, 1994, incorporated by
reference to Exhibit 10.(iv)(A)(v) of the
Company's Registration Statement on Form S-1
(Registration 33-33252).
10.(ii)(I) Tenth Amendment to Account Purchase Agreement
dated June 16, 1994, by and between Montgomery
Ward Credit Corporation and Montgomery Ward &
Co., Incorporated, incorporated by reference to
Exhibit 10.(ii)(B)(11) of the Company's
Registration Statement on Form S-1
(Registration No. 33-33252).
10.(ii)(J) Second Amendment dated June 16, 1994 to
Signature Credit Agreement by and among
Signature Financial/Marketing, Inc., Montgomery
Ward & Co., Incorporated and Montgomery Ward
Credit Corporation, incorporated by reference
to Exhibit 10.(ii)(C)(2) of the Company's
Registration Statement on Form S-1
(Registration No. 33-33252).
<PAGE>
PART II - OTHER INFORMATION (Continued)
Item 6. Exhibits and Reports on Form 8-K.
10.(iv)(A)(1) Montgomery Ward & Co., Incorporated Stock
Ownership Plan, as amended and restated May 20,
1994, incorporated by reference to Exhibit
10.(iv)(A)(ii)(a) of the Company's Registration
Statement on Form S-1 (Registration No. 33-
33252).
10.(iv)(H) Montgomery Ward & Co., Incorporated Executive
Long-Term Incentive Plan, incorporated by
reference to Exhibit 10.(iv)(B)(1) of the
Company's Registration Statement on Form S-1
(Registration No. 33-33252).
10.(iv)(I) Montgomery Ward & Co., Incorporated Senior
Executive Performance Management Program,
incorporated by reference to Exhibit
10.(iv)(C)(i) of the Company's Registration
Statement on Form S-1 (Registration No. 33-
33252).
10.(xi)(A) Employment Agreement dated March 1, 1994
between Montgomery Ward & Co., Incorporated and
Richard Bergel, incorporated by reference to
Exhibit 10.(xi)(A) of the Company's
Registration Statement on Form S-1
(Registration No. 33-33252).
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.
REGISTRANT MONTGOMERY WARD HOLDING CORP.
BY JOHN L. WORKMAN
NAME AND TITLE John L. Workman, Executive Vice President,
Chief Financial Officer and Assistant Secretary
DATE August 16, 1994
<TABLE>
<CAPTION>
EXHIBIT INDEX
EXHIBIT SUBMISSION MEDIA
- ------- ----------------
<C> <S> <S>
2.(i)(A)(1) First Amendment to
Agreement and Plan of
Merger dated June 15,
1994, by and among
Montgomery Ward & Co.,
Incorporated, LMR
Acquisition Corporation,
and the Stockholders'
Committee.
3.2(ii) Certificate of Amend- Incorporated by
ment to Certificate of reference to Exhibit
Incorporation, filed 3.2(ii) of the
April 27, 1994. Company's Registration
Statement on Form S-1
(Registration No.
33-33252).
3.2(iii) Third Restated Incorporated by
Certificate of Incor- reference to Exhibit
portion of Registrant, 3.2(iii) of the
filed June 28, 1994. Company's Registration
Statement on Form S-1
(Registration No.
33-33252).
3.3(i) Amended and Restated Incorporated by
By-laws of the Regis- reference to Exhibit
trant, dated April 15, 3.3(i) of the Company's
1994. Registration Statement
on Form S-1 (Registration
No. 33-33252).
10.(i)(A)(v) Montgomery Ward & Co., Incorporated by
Incorporated Stock reference to Exhibit
Ownership Plan Terms 10.(iv)(A)(v) of the
and Conditions, as Company's Registration
amended and restated Statement on Form S-1
May 20, 1994. (Registration No.
33-33252).
<PAGE>
EXHIBIT INDEX
EXHIBIT SUBMISSION MEDIA
- ------- ----------------
10.(ii)(I) Tenth Amendment to Incorporated by
Account Purchase reference to Exhibit
Agreement dated 10.(ii)(B)(11) of the
June 16, 1994, by and Company's Registration
between Montgomery Statement on Form S-1
Ward Credit Corpora- (Registration No.
tion and Montgomery 33-33252).
Ward & Co., Incor-
porated.
10.(ii)(J) Second Amendment Incorporated by
dated June 16, 1994 reference to Exhibit
to Signature Credit 10.(ii)(C)(2) of the
Agreement by and Company's Registration
among Signature Statement on Form S-1
Financial/Marketing, (Registration No.
Inc., Montgomery Ward 33-33252).
& Co., Incorporated
and Montgomery Ward
Credit Corporation.
10.(iv)(A)(1) Montgomery Ward & Co., Incorporated by
Incorporated Stock reference to Exhibit
Ownership Plan, as 10.(iv)(A)(ii)(a) of
amended and restated the Company's Registra-
May 20, 1994. tion Statement on
Form S-1 (Registration
No. 33-33252).
10.(iv)(H) Montgomery Ward & Co., Incorporated by
Incorporated Executive reference to Exhibit
Long-Term Incentive 10.(iv)(B)(1) of the
Plan. Company's Registration
Statement on Form S-1
(Registration No.
33-33252).
10.(iv)(I) Montgomery Ward & Co., Incorporated by
Incorporated Senior reference to Exhibit
Executive Performance 10.(iv)(C)(i) of the
Management Program. Company's Registration
Statement on Form S-1
(Registration No.
33-33252).
<PAGE>
EXHIBIT INDEX
EXHIBIT SUBMISSION MEDIA
- ------- ----------------
10.(xi)(A) Employment Agreement Incorporated by
dated March 1, 1994 reference to Exhibit
between Montgomery 10.(xi)(A) of the
Ward & Co., Incor- Company's Registration
porated and Richard Statement on Form S-1
Bergel. (Registration No.
33-33252).
</TABLE>
EXHIBIT 2.(i)(A)(1)
FIRST AMENDMENT TO AGREEMENT
AND PLAN OF MERGER
THIS FIRST AMENDMENT TO AGREEMENT AND PLAN OF MERGER is
entered into as of this 15th day of June, 1994, among Montgomery
Ward & Co., Incorporated, an Illinois corporation ("Purchaser"),
LMR Acquisition corporation, a Massachusetts Corporation ("LMR"),
and the Stockholders' Committee (as defined in that certain
Agreement and Plan of Merger, dated March 17, 1994, among Ward,
LMR, MW Merger Corp., and the Stockholders of LMR Acquisition
Corporation executing counterparts of said Agreement (the
"Agreement")). Capitalized terms not otherwise defined herein
shall have the meanings ascribed to them in the Agreement.
R E C I T A L S
A. Pursuant to the Agreement, LMR has become a wholly owned
subsidiary of Purchaser.
B. Purchaser, LMR and the Stockholders' Committee desire to
amend the Agreement.
A G R E E M E N T S
NOW, THEREFORE, for good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the
parties agree as follows:
1. Section 1.8(e)(vi) of the Agreement is hereby amended to
read as follows:
"(vi) Lechmere may provide space to Purchaser at up to
eleven (11) retail stores, to operate leased jewelry
departments, and Lechmere may incorporate tests of new
merchandise strategies for furniture categories at up to four
(4) retail stores (which furniture tests may also be operated
as leased departments). For the leased departments, Purchaser
shall pay, or reimburse Lechmere for, all expenses in
connection therewith, including without limitation
advertising, distribution and compensation expenses but
excluding occupancy costs. For leased jewelry departments,
Purchaser shall pay commissions to Lechmere at the rate of 15%
of net sales of such departments. For any leased furniture
departments, Purchaser shall include in the Adjusted Gross
<PAGE>
Profit calculation an amount equal to what the Adjusted Gross
Profit from such operations would have been if Lechmere had
conducted such operations, and commission income from leased
furniture departments will be disregarded. For the purposes
of the calculation of Adjusted Gross Profit, commission income
from leased jewelry departments and Adjusted Gross Profit from
said test strategies (if any) shall be included in the
calculation and no adjustment shall be made for lost Adjusted
Gross Profit, if any, from merchandise categories displaced
resulting from the test;".
2. Schedule I to the Agreement is amended to add to Part II
of each of the subsections thereof relating to the new stores to be
opened in Saugus, Massachusetts, Portland, Maine, Milford,
Connecticut and North Haven Connecticut the following respective
amounts for those respective stores, with each month referred to
therein being a fiscal month of Lechmere:
North
Portland Saugus Haven Milford
August 1994
Minimum 13.6
Maximum 14.4
September 1994
Minimum 15.0 9.4 8.9
Maximum 15.9 9.9 9.5
October 1994
Minimum 10.5 6.6 6.2
Maximum 11.1 7.0 6.6
November 1994
Minimum 19.7 12.3 11.7
Maximum 20.9 13.1 12.4
December 1994
Minimum 23.4 21.7 14.7 13.9
Maximum 24.8 23.0 15.5 14.7
January 1995
Minimum 9.7 9.0 6.0 5.7
Maximum 10.2 9.5 6.4 6.1
February 1995
Minimum 10.5 9.7 6.6 6.2
Maximum 11.1 10.3 7.0 6.6
<PAGE>
3. Except as amended hereby, the Agreement shall remain in
full force and effect.
4. This First amendment may be executed in multiple
counterparts, each of which shall be deemed to be an original and
all of which shall constitute one instrument.
IN WITNESS WHEREOF, the parties have executed this instrument
as of the date first above written.
MONTGOMERY WARD & CO., INCORPORATED LMR ACQUISITION CORPORATION
By: /s/ John Workman By: /s/ John Workman
Executive Vice President President
STOCKHOLDERS' COMMITTEE LECHMERE, INC.
By: /s/ Richard Lubin By: /s/ John Workman
Richard K. Lubin Vice President
By: /s/ Thomas Nolan
Thomas Nolan
By: /s/ Stephen Karp
Stephen Karp
By: /s/ J. Kent Flummerfelt
J. Kent Flummerfelt
