<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10 - Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended October 28, 2000
----------------
Commission file no. 1-10299
-------
VENATOR GROUP, INC.
-------------------
(Exact name of registrant as specified in its charter)
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<S> <C>
New York 13-3513936
--------------------------------------------- ------------------------------------
(State or other jurisdiction of incorporation (I.R.S. Employer Identification No.)
or organization)
112 W. 34th Street, New York, New York 10120
---------------------------------------- ----------
(Address of principal executive offices) (Zip Code)
</TABLE>
Registrant's telephone number: (212) 720-3700
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Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. YES X NO
---- ----
Number of shares of Common Stock outstanding at December 1, 2000: 138,028,871
------------
<PAGE> 2
VENATOR GROUP, INC.
TABLE OF CONTENTS
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<CAPTION>
PAGE NO.
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Part I. Financial Information
Item 1. Financial Statements
Condensed Consolidated Balance Sheets.......................................1
Condensed Consolidated Statements
of Operations..........................................................2
Condensed Consolidated Statements
of Comprehensive Income (Loss).........................................3
Condensed Consolidated Statements
of Cash Flows..........................................................4
Notes to Condensed Consolidated
Financial Statements................................................5-10
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations......................10-15
Part II. Other Information
Item 1. Legal Proceedings..........................................................16
Item 6. Exhibits and Reports on Form 8-K...........................................16
Signature..................................................................17
Index to Exhibits.......................................................18-19
</TABLE>
<PAGE> 3
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
VENATOR GROUP, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in millions, except shares)
<TABLE>
<CAPTION>
October 28, October 30, January 29,
2000 1999* 2000
--------------- -------------- --------------
(Unaudited) (Unaudited) (Audited)
<S> <C> <C> <C>
ASSETS
------
Current assets
Cash and cash equivalents.................................... $ 18 $ 63 $ 162
Merchandise inventories...................................... 922 863 739
Assets held for disposal..................................... 54 179 61
Net assets of discontinued operations........................ 9 85 13
Other current assets......................................... 126 168 114
------ ------- ------
1,129 1,358 1,089
Property and equipment, net..................................... 740 882 809
Deferred taxes ................................................. 312 354 317
Goodwill, net ................................................. 145 153 151
Other assets.................................................... 147 96 149
------ ------ ------
$ 2,473 $ 2,843 $ 2,515
====== ======= =======
LIABILITIES AND SHAREHOLDERS' EQUITY
------------------------------------
Current liabilities
Short-term debt.............................................. $ 140 $ 300 $ 71
Accounts payable ............................................ 299 354 233
Accrued liabilities.......................................... 246 207 254
Current portion of repositioning and restructuring reserves.. 37 30 88
Current portion of reserve for discontinued operations....... 16 87 25
Current portion of long-term debt and obligations
under capital leases....................................... 54 208 106
------ ------ ------
792 1,186 777
Long-term debt and obligations
under capital leases......................................... 259 313 312
Other liabilities............................................... 263 323 287
Shareholders' equity
Common stock and paid-in capital: 138,116,998;
137,422,104 and 137,542,104 shares, respectively........... 344 335 337
Retained earnings............................................ 994 872 945
Accumulated other comprehensive loss......................... (178) (186) (142)
Less: Treasury stock at cost: 199,625; 30,000 and
100,000 shares, respectively............................... (1) - (1)
------ ------- --------
Total shareholders' equity...................................... 1,159 1,021 1,139
------ ------- --------
$ 2,473 $ 2,843 $ 2,515
====== ======= ========
</TABLE>
See Accompanying Notes to Condensed Consolidated Financial Statements.
* 1999 interim information has been restated to reflect the change in method for
calculating the market-related value of pension plan assets.
-1-
<PAGE> 4
VENATOR GROUP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(in millions, except per share amounts)
<TABLE>
<CAPTION>
Thirteen weeks ended Thirty-nine weeks ended
--------------------------- -----------------------------
Oct. 28, Oct. 30, Oct. 28, Oct. 30,
2000 1999* 2000 1999*
---------- ------------ ------------ -------------
<S> <C> <C> <C> <C>
Sales........................................................ $ 1,160 $ 1,178 $ 3,309 $ 3,320
Costs and Expenses
Cost of sales.............................................. 804 848 2,334 2,430
Selling, general and administrative expenses............... 264 254 763 758
Depreciation and amortization.............................. 40 47 121 138
Restructuring charge....................................... 4 3 4 55
Interest expense, net...................................... 8 17 23 45
Other income............................................... - (5) (16) (36)
------- ------- ------- -------
1,120 1,164 3,229 3,390
------- ------- ------- -------
Income (loss) from continuing operations
before income taxes...................................... 40 14 80 (70)
Income tax expense (benefit)................................. 15 6 31 (27)
------- ------- ------- -------
Income (loss) from continuing operations..................... 25 8 49 (43)
Income on disposal of discontinued operations, net of
income tax expense of $7................................. - - - 10
Cumulative effect of accounting change, net of income tax
expense of $6............................................ - - - 8
------- ------- ------- -------
Net income (loss)............................................ $ 25 $ 8 $ 49 $ (25)
======= ======= ======= =======
Basic earnings per share:
Income (loss) from continuing operations................. $ 0.18 $ 0.06 $ 0.36 $ (0.31)
Income from discontinued operations...................... - - - 0.07
Cumulative effect of accounting change................... - - - 0.06
------- ------- ------- -------
Net income (loss)........................................ $ 0.18 $ 0.06 $ 0.36 $ (0.18)
======= ======= ======= =======
Weighted-average common shares outstanding................... 137.9 137.4 137.7 137.1
Diluted earnings per share:
Income (loss) from continuing operations................. $ 0.18 $ 0.06 $ 0.35 $ (0.31)
Income from discontinued operations...................... - - - 0.07
Cumulative effect of accounting change................... - - - 0.06
------- ------- ------- -------
Net income (loss)........................................ $ 0.18 $ 0.06 $ 0.35 $ (0.18)
======= ======= ======= =======
Weighted-average common shares assuming dilution............. 139.5 138.4 139.0 137.1
</TABLE>
See Accompanying Notes to Condensed Consolidated Financial Statements.
* 1999 interim information has been restated to reflect the change in method for
calculating the market-related value of pension plan assets.
-2-
<PAGE> 5
VENATOR GROUP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(Unaudited)
(in millions)
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<CAPTION>
Thirteen weeks ended Thirty-nine weeks ended
--------------------------- -----------------------------
Oct. 28, Oct. 30, Oct. 28, Oct. 30,
2000 1999* 2000 1999*
---------- ------------- ----------- --------------
<S> <C> <C> <C> <C>
Net income (loss)........................................... $ 25 $ 8 $ 49 $ (25)
Other comprehensive income (loss), net of tax.
Foreign currency translation adjustments arising
during the period, net of deferred tax expense
(benefit) of($15), $2, ($23) and $1, respectively......... (23) 3 (36) 1
---------- ------------- ----------- --------------
Comprehensive income (loss)................................. $ 2 $ 11 $ 13 $ (24)
========== ============= =========== ==============
</TABLE>
See Accompanying Notes to Condensed Consolidated Financial Statements.
* 1999 interim information has been restated to reflect the change in method for
calculating the market-related value of pension plan assets.
-3-
<PAGE> 6
VENATOR GROUP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(in millions)
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<CAPTION>
Thirty-nine weeks ended
----------------------------
Oct. 28, Oct. 30,
2000 1999*
---------- ------------
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From Operating Activities:
Net income (loss)............................................................ $ 49 $ (25)
Adjustments to reconcile net income (loss) to net cash provided by
(used in) operating activities of continuing operations:
Cumulative effect of accounting change, net of tax......................... - (8)
Restructuring charge....................................................... 4 55
Income on disposal of discontinued operations, net of tax ................. - (10)
Depreciation and amortization.............................................. 121 138
Gains on sales of investments.............................................. (6) -
Gains on sales of real estate.............................................. (10) (36)
Deferred taxes............................................................. (11) (28)
Change in assets and liabilities:
Merchandise inventories.................................................. (198) (130)
Accounts payable and other accruals...................................... 45 45
Repositioning and restructuring reserves................................. (56) (10)
Other, net............................................................... 8 (50)
------ -------
Net cash used in operating activities of continuing operations............... (54) (59)
------ -------
From Investing Activities:
Proceeds from sales of investments .......................................... 7 -
Proceeds from sales of real estate .......................................... 7 29
Capital expenditures......................................................... (69) (122)
------ -------
Net cash used in investing activities of continuing operations............... (55) (93)
------ -------
From Financing Activities:
Increase in short-term debt.................................................. 69 50
Reduction in long-term debt and capital lease obligations.................... (104) -
Issuance of common stock..................................................... 5 6
------ -------
Net cash (used in) provided by financing activities of continuing operations. (30) 56
------ -------
Net Cash used in Discontinued Operations........................................ (9) (30)
Effect of exchange rate fluctuations
on Cash and Cash Equivalents................................................. 4 (4)
------ --------
Net change in Cash and Cash Equivalents......................................... (144) (130)
Cash and Cash Equivalents at beginning of year.................................. 162 193
------ -------
Cash and Cash Equivalents at end of interim period.............................. $ 18 $ 63
====== =======
Cash paid during the period:
Interest..................................................................... $ 22 $ 41
Income taxes................................................................. $ 28 $ 19
</TABLE>
See Accompanying Notes to Condensed Consolidated Financial Statements.
* 1999 interim information has been restated to reflect the change in method for
calculating the market-related value of pension plan assets.
-4-
<PAGE> 7
VENATOR GROUP, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Basis of Presentation
The accompanying unaudited condensed consolidated financial statements
should be read in conjunction with the Notes to Consolidated Financial
Statements contained in the Registrant's Form 10-K for the year ended January
29, 2000, as filed with the Securities and Exchange Commission (the "SEC") on
April 21, 2000. Certain items included in these statements are based on
management's estimates. In the opinion of management, all material adjustments,
which are of a normal recurring nature, necessary for a fair presentation of the
results for the interim periods have been included. The results for the
thirty-nine weeks ended October 28, 2000 are not necessarily indicative of the
results expected for the year.
Cumulative Effect of Change in Accounting Principle
In the fourth quarter of 1999, the Registrant adopted a preferred
method for calculating the market-related value of its U.S. pension plan assets
used in determining annual pension expense. The change was accounted for as if
it had occurred at the beginning of the first quarter of 1999 and accordingly,
interim information presented for 1999 has been restated to reflect this change.
The impact of this change resulted in a non-cash benefit in 1999 of
approximately $14 million before-tax, or $0.06 per diluted share, representing
the cumulative effect of the accounting change related to years prior to 1999.
The change resulted in lower pension expense in 1999 of $4.5 million before-tax,
or $0.02 per diluted share as follows: $0.8 million in each of the first and
second quarters, $1.8 million in the third quarter and $1.1 million in the
fourth quarter.
1999 Restructuring
During the second quarter of 1999, the Registrant recorded a
restructuring charge of $64 million before-tax or $39 million after-tax, in
connection with its plan to sell or liquidate eight non-core businesses: The San
Francisco Music Box Company, Randy River Canada, Foot Locker Outlets, Colorado,
Team Edition, Going To The Game!, Weekend Edition and Burger King franchises.
Major components of the charge included $24 million for leasehold and real
estate disposition costs, $19 million for fixed asset and other asset
impairments, $12 million for inventory markdowns and $9 million for other exit
costs. The inventory markdowns of $12 million were included in cost of sales
while the remaining $52 million restructuring charge was included in operating
expenses. The Registrant recorded an additional charge to the reserve of $3
million in the third quarter of 1999 relating to fixed asset and real estate
disposition costs and a reduction of $4 million in the fourth quarter of 1999
relating to better than anticipated real estate disposition costs related to the
Foot Locker Outlets.
In 2000, the Registrant recorded an additional charge of $5 million in
the first quarter relating to the disposal of the remaining businesses and a
reduction of $3 million in the second quarter relating to the disposition of the
Foot Locker Outlets real estate, which continued to produce better than
anticipated results. In the third quarter of 2000, the disposition of Randy
River Canada, Foot Locker Outlets, Colorado, Going to the Game! and Weekend
Edition were essentially complete and the Registrant recorded a further charge
of $4 million associated with dispositions in progress. In addition, during the
third quarter, management decided to continue to operate Team Edition as a
manufacturing business, primarily as a result of the resurgence of the screen
print business. As of October 28, 2000, the assets of Team Edition were
reclassified from assets held for disposal and were recorded at fair value as of
the date the decision to continue the business was made, which approximated
their carrying value at such date, which was lower than the original carrying
value at the commitment date to dispose of the business, adjusted for
depreciation and amortization expense.
For the thirty-nine weeks ended October 28, 2000, disposition activity
of approximately $17 million was charged to the reserve and included $12 million
in leasehold and real estate disposition costs, $1 million for the loss on
disposal of Randy River Canada and $4 million in severance and other costs. The
reserve balance at October 28, 2000 of $13 million reflects estimated lease
costs of $3 million and other disposition costs of $10 million, which will be
substantially utilized within twelve months.
-5-
<PAGE> 8
In the fourth quarter of 1999, the Registrant announced a further
restructuring plan and recorded a charge of $92 million before-tax or $56
million after-tax. The Registrant planned to close 358 under-performing stores
in the United States and Canada (including the entire Northern Getaway and
Northern Elements formats in the United States) and its Foot Locker stores in
Asia, to reduce sales support and corporate staff by over 30 percent and to
close its distribution center in Maumelle, Arkansas.
As of January 29, 2000, 72 stores included in the accelerated
store-closing program had been closed. During the first and second quarters of
2000, 215 and 11 stores were closed, respectively. In the second quarter of
2000, the Registrant recorded a further charge of approximately $4 million
primarily associated with unfavorable real estate costs, the addition of 6
stores to the program and further fixed asset write-offs. This charge was
partially offset by a reversal of $1 million due to management's decision to
continue to operate 14 athletic stores that were originally included in the
accelerated store-closing program, as a result of favorable lease renewal terms
offered during negotiations with landlords.
During the third quarter of 2000, the Registrant closed an additional
13 stores. The remaining 39 stores included in the program are expected to close
over the next few months. Disposition activity charged to the reserve for the
thirty-nine weeks ended October 28, 2000 amounted to approximately $26 million
and consisted primarily of real estate costs. The reserve balance of $15 million
at October 28, 2000, included in current liabilities, primarily represents
leasehold and real estate disposition costs. Of the original 3,100 planned
terminations, approximately 150 positions have yet to be eliminated in the
United States and Canada as of October 28, 2000.
All remaining Foot Locker stores in Asia were closed during the first
quarter of 2000. Real estate, severance and other exit costs of approximately $3
million for the thirty-nine weeks ended October 28, 2000 essentially utilized
the remaining reserve for those stores.
Of the original planned reduction of 400 sales support and corporate
staff, approximately 20 positions have yet to be eliminated. Related severance
payments reduced the reserve from $14 million at January 29, 2000 to $4 million
at October 28, 2000. The Registrant entered into an agreement to sublease its
Maumelle distribution center earlier than anticipated and to sell the associated
fixed assets, which had been fully impaired in the fourth quarter of 1999, for
proceeds of approximately $3 million. The Registrant recorded a reduction to the
Maumelle reserve of $5 million in connection with the agreement in the first
quarter of 2000 and the proceeds were received in the second quarter.
Disposition activity for the thirty-nine weeks ended October 28, 2000 of $2
million comprised severance payments of $1 million to eliminate 181 positions
and real estate costs of $1 million. The remaining reserve balance as of October
28, 2000 of $1 million reflects lease and other exit costs.
Sales and operating losses of the above non-core businesses and the
under-performing stores, excluding Team Edition, included in the consolidated
results of operations for the thirteen and thirty-nine weeks ended October 28,
2000 and October 30, 1999, respectively, are presented below.
<TABLE>
<CAPTION>
Thirteen weeks ended Thirty-nine weeks ended
------------------------------- -------------------------------
(in millions) Oct. 28, 2000 Oct. 30, 1999 Oct. 28, 2000 Oct. 30, 1999
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Sales................................................ $ 28 $ 94 $ 90 $ 251
============= ============= ============= =============
Operating loss....................................... $ (2) $ (15) $ (18) $ (57)
============= ============= ============= =============
</TABLE>
Inventory, fixed assets and other long-lived assets of all businesses
to be exited have been valued at the lower of cost or net realizable value.
These assets, totaling $54 million, $179 million and $61 million have been
reclassified as assets held for disposal in the Condensed Consolidated Balance
Sheets as of October 28, 2000, October 30, 1999 and January 29, 2000,
respectively. As previously mentioned, the assets of Team Edition have not been
reflected as assets held for disposal as of October 28, 2000 as management has
decided to retain its operations.
-6-
<PAGE> 9
Segment Information
Sales and operating results for the Registrant's reportable segments
for the thirteen and thirty-nine weeks ended October 28, 2000 and October 30,
1999, respectively, are presented below. Operating results reflect income (loss)
from continuing operations before income taxes, excluding corporate expense,
corporate gains and net interest expense.
Sales:
<TABLE>
<CAPTION>
(in millions) Thirteen weeks ended Thirty-nine weeks ended
------------------------------- -------------------------------
Oct. 28, 2000 Oct. 30, 1999 Oct. 28, 2000 Oct. 30, 1999
-------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Global Athletic Group:
Retail Stores........................................ $ 988 $ 948 $ 2,850 $ 2,686
Direct to Customers.................................. 67 53 171 139
-------------- ------------- ------------- -------------
1,055 1,001 3,021
2,825
Northern Group.......................................... 82 97 228 252
All Other *............................................. 23 80 60 243
-------------- ------------- ------------- -------------
$ 1,160 $ 1,178 $ 3,309 $ 3,320
============== ============= ============= =============
</TABLE>
<TABLE>
<CAPTION>
Operating Results:
(in millions) Thirteen weeks ended Thirty-nine weeks ended
-------------------------- -----------------------------
Oct. 28, Oct. 30, Oct. 28, Oct. 30,
2000 1999** 2000 1999**
-------- --------- -------- --------
<S> <C> <C> <C> <C>
Global Athletic Group:
Retail Stores (1).................................... $ 74 $ 35 $ 187 $ (7)
Direct to Customers.................................. 3 - (5) 3
-------- --------- -------- --------
77 35 182 (4)
Northern Group (2)...................................... (4) 1 (20) (21)
All Other*(3)........................................... (6) (4) (19) (2)
-------- --------- -------- --------
Operating profit (loss)........................... 67 32 143 (27)
Corporate expense (income) (4).................... 19 1 40 (2)
Interest expense, net............................. 8 17 23 45
-------- --------- -------- --------
Income (loss) from continuing operations
before income taxes.................................. $ 40 $ 14 $ 80 $ (70)
======== ========= ======== ========
</TABLE>
(1) Thirty-nine weeks ended October 28, 2000 includes a $3 million
reduction in the 1999 second quarter restructuring charge,
offset by a $2 million restructuring charge. Thirty-nine weeks
ended October 30, 1999 includes restructuring charges of $64
million.
(2) Thirty-nine weeks ended October 28, 2000 includes a $1 million
restructuring charge.
(3) Thirteen and thirty-nine weeks ended October 28, 2000 include
restructuring charges of $4 million and $9 million,
respectively. Both periods presented for 1999 include a $3
million restructuring charge.
(4) Thirty-nine weeks ended October 28, 2000 includes a $5 million
reduction in the 1999 fourth quarter restructuring charge.
* All formats presented as "All Other" were either disposed or held for disposal
at October 28, 2000. Sales and operating results in 2000 do not include
Afterthoughts, Weekend Edition and Randy River Canada, which were sold in the
fourth quarter of 1999.
** 1999 interim information has been restated to reflect the change in method
for calculating the market-related value of pension plan assets.
-7-
<PAGE> 10
Discontinued Operations
In the third quarter of 1998, the Registrant announced that it was
exiting its International General Merchandise segment. Net disposition activity
of approximately $6 million charged to the reserve for the thirty-nine weeks
ended October 28, 2000 primarily reflected lease payments. Of the remaining
reserve balance of $4 million at October 28, 2000, $1 million is required to
satisfy lease obligations within twelve months and the remaining $3 million
thereafter.
The Registrant also announced in the third quarter of 1998 that it was
exiting its Specialty Footwear segment. Net disposition activity of
approximately $9 million charged to the reserve for the thirty-nine weeks ended
October 28, 2000 primarily reflected lease payments. The reserve balance of $19
million at October 28, 2000 primarily represents leasehold obligations, $3
million of which is expected to be utilized within twelve months and the
remaining $16 million thereafter.
In 1997, the Registrant announced that it was exiting its Domestic
General Merchandise segment. Net disposition activity of approximately $7
million charged to the reserve for the thirty-nine weeks ended October 28, 2000
included payments for leasehold and real estate disposition costs. The reserve
balance of $16 million at October 28, 2000 primarily represents real estate
disposition costs, $12 million of which is expected to be utilized within twelve
months and the remaining $4 million thereafter.
The following is a summary of the net assets of discontinued operations:
<TABLE>
<CAPTION>
(in millions) Oct. 28, Oct. 30, January 29,
2000 1999 2000
-------- -------- --------
<S> <C> <C> <C>
International General Merchandise
---------------------------------
Assets............................................. $ - $ 45 $ 5
Liabilities........................................ - 9 2
------ --------- --------
Net assets of discontinued operations.............. $ - $ 36 $ 3
------ --------- --------
Specialty Footwear
------------------
Assets ............................................ $ 3 $ 52 $ 5
Liabilities........................................ 1 11 2
--------- --------- --------
Net assets of discontinued operations.............. $ 2 $ 41 $ 3
--------- --------- --------
Domestic General Merchandise
----------------------------
Assets ............................................ $ 11 $ 16 $ 12
Liabilities........................................ 4 8 5
--------- --------- --------
Net assets of discontinued operations.............. $ 7 $ 8 $ 7
--------- --------- --------
Total net assets of discontinued operations........ $ 9 $ 85 $ 13
========= ========= ========
</TABLE>
The assets primarily include deferred tax assets and fixed assets.
Liabilities primarily reflect accounts payable and other accrued liabilities.
Accumulated Other Comprehensive Loss
Accumulated other comprehensive loss consists of foreign currency
translation adjustments of $176 million, $143 million, and $140 million, and
minimum pension liability adjustments of $2 million, $43 million, and $2
million, at October 28, 2000, October 30, 1999, and January 29, 2000,
respectively.
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<PAGE> 11
Earnings Per Share
Basic earnings per share is computed as net income (loss) divided by
the weighted-average number of common shares outstanding for the period. Diluted
earnings per share reflects the potential dilution that could occur from common
shares issuable through stock-based compensation such as stock options. A
reconciliation of weighted-average common shares outstanding to weighted-average
common shares assuming dilution follows:
<TABLE>
<CAPTION>
Thirteen weeks ended Thirty-nine weeks ended
--------------------------- -----------------------------
(in millions) Oct. 28, Oct. 30, Oct. 28, Oct. 30,
2000 1999 2000 1999
---------- ------------ ----------- --------------
<S> <C> <C> <C> <C>
Weighted-average common shares outstanding.................... 137.9 137.4 137.7 137.1
Incremental common shares issuable............................ 1.6 1.0 1.3 -
---------- ------------ ----------- --------------
Weighted-average common shares assuming dilution.............. 139.5 138.4 139.0 137.1
========== ============ =========== ==============
</TABLE>
Incremental common shares were not included in the computation for the
year-to-date period ended October 30, 1999 since their inclusion in periods when
the Registrant reported a loss from continuing operations would be antidilutive.
Options to purchase shares of common stock with an exercise price greater than
the average market price were not included in the computation of diluted
earnings per share for all periods presented.
Stock Plans
The 1998 Stock Option and Award Plan was amended during the second
quarter of 2000 to provide awards of up to 12,000,000 shares of the Registrant's
common stock. The number of shares reserved for issuance as restricted stock and
other stock-based awards can not exceed 3,000,000 shares.
During the second quarter of 2000, the Registrant adopted the Directors
Stock Option Plan ("Directors Option Plan"). Under the Directors Option Plan,
non-employee directors can receive options to purchase shares of the
Registrant's common stock at 100 percent of the market price at the date of the
grant. Options are exercisable in three equal annual installments commencing on
the first anniversary of the date of grant. The options terminate 10 years from
the date of grant. An aggregate of 100,000 shares are authorized for issuance
under the Directors Option Plan.
Long-Term Debt
The Registrant purchased $100 million of the $200 million 7.0 percent
debentures, which were due June 1, 2000, at various dates throughout January
2000. The Registrant purchased an additional $13 million of the 7.0 percent
debentures prior to June 1, 2000, when the remaining $87 million balance
outstanding was repaid.
Other Income
Other income of $16 million for the thirty-nine weeks ended October 28,
2000 included corporate real estate gains of $4 million and $6 million in the
first and second quarters, respectively, and a $6 million gain associated with
the demutualization of the Metropolitan Life Insurance Company in the first
quarter. Other income of $36 million for the thirty-nine weeks ended October 30,
1999 reflected corporate real estate gains of $28 million related to the sale of
eleven properties and the recognition of $8 million of the deferred gain
recorded on the 1998 sale of the corporate headquarters.
-9-
<PAGE> 12
Recent Accounting Pronouncements
In March 2000, the Financial Accounting Standards Board ("FASB") issued
Financial Interpretation No. 44, "Accounting for Certain Transactions Involving
Stock Compensation, an Interpretation of APB Opinion 25, Accounting for Stock
Issued to Employees," ("FIN No. 44"). FIN No. 44 provides further guidance
related to accounting for stock-based compensation, in particular to changes in
stock-based awards after the grant date. In the second quarter of 2000, the
Registrant adopted FIN No. 44, which did not have any impact on its consolidated
financial statements.
In December 1999, the Securities and Exchange Commission issued Staff
Accounting Bulletin No. 101, "Revenue Recognition in Financial Statements" ("SAB
No. 101"), which interprets generally accepted accounting principles related to
revenue recognition in financial statements. The Registrant will change its
method of accounting for sales under its layaway program and will record the
cumulative effect of that change as of the beginning of the fiscal year, in the
fourth quarter of 2000. The Registrant does not expect SAB No. 101 to have a
significant impact on its consolidated financial statements. The Emerging Issues
Task Force recently released Issue No. 00-10, "Accounting for Shipping and
Handling Fees and Costs" ("Issue No. 00-10"), which is effective in the fourth
quarter of 2000. Shipping and handling charges to customers will be reclassified
as sales and the associated costs as cost of sales for all periods presented.
The Registrant does not expect Issue No. 00-10 to have a significant impact on
its consolidated financial statements.
In June 1998, the FASB issued Statement of Financial Accounting
Standards ("SFAS") No. 133, "Accounting for Derivative Instruments and Hedging
Activities" ("SFAS No. 133"). SFAS No. 133, as amended by SFAS No. 137 and SFAS
No. 138, is effective for the Registrant for fiscal year 2001. SFAS No. 133
requires that all derivative financial instruments be recorded in the
Consolidated Balance Sheets at their fair values. Changes in fair value of
derivatives will be recorded each period in earnings or other comprehensive
income (loss), depending on the type of hedging designation, if any. The
Registrant primarily enters into contracts in order to hedge the foreign
currency risk associated with future cash flows. As such, the effective portion
of the gain or loss on the hedging derivative instrument will be reported as a
component of other comprehensive income (loss) and will be reclassified to
earnings in the period in which the hedged item affects earnings. Since the
impact of SFAS No. 133 is dependent on future market rates and outstanding
derivative positions at the beginning of fiscal 2001, the Registrant cannot yet
determine the impact on its consolidated financial statements.
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
References included herein to businesses disposed and held for disposal
relate to Afterthoughts, The San Francisco Music Box Company, Foot Locker
Outlets, Colorado, Going To The Game!, Randy River Canada, Weekend Edition,
Burger King franchises, Foot Locker Asia, Northern Elements U.S. and Northern
Getaway U.S.
RESULTS OF OPERATIONS
Sales of $1,160 million for the third quarter of 2000 decreased 1.5
percent from sales of $1,178 million for the third quarter of 1999, reflecting a
6.4 percent increase attributable to sales of ongoing formats, offset by a 7.9
percent decline related to businesses disposed and held for disposal. Sales of
$3,309 million for the thirty-nine weeks ended October 28, 2000 were essentially
flat as compared with $3,320 million for the thirty-nine weeks ended October 30,
1999, reflecting an increase of 7.8 percent attributable to ongoing formats,
which was offset by a decline of 8.1 percent related to businesses disposed and
held for disposal. Excluding the effect of foreign currency fluctuations and
sales from businesses disposed and held for disposal, sales increased 9.0
percent and 10.1 percent for the third quarter and year-to-date periods of 2000,
respectively, as compared with the corresponding prior-year periods, reflecting
increases of 10.1 percent and 11.2 percent in comparable-store sales.
-10-
<PAGE> 13
Gross margin, as a percentage of sales, improved by approximately 270
basis points for both the thirteen and thirty-nine weeks ended October 28, 2000,
to 30.7 percent and 29.5 percent, respectively, as compared with the
corresponding prior-year periods. These increases in 2000 reflect reduced
occupancy, buying costs and markdowns as a percentage of sales along with
improved purchasing. Excluding the inventory markdowns of $12 million in the
second quarter of 1999 associated with the Registrant's restructuring plan to
exit eight non-core businesses, gross margin increased by approximately 230
basis points for the thirty-nine weeks ended October 28, 2000.
Selling, general and administrative expenses ("SG&A") of $264 million
increased by approximately 120 basis points to 22.8 percent of sales in the
third quarter of 2000 as compared with 21.6 percent in the corresponding
prior-year period. SG&A of $763 million for the thirty-nine weeks ended October
28, 2000, increased slightly to 23.1 percent of sales as compared with 22.8
percent for the 1999 year-to-date period. These increases reflect increased
compensation and marketing costs in 2000 as compared with a year earlier, offset
in part, by a reduced and more efficient store base. For the thirty-nine weeks
ended October 28, 2000, SG&A also included Internet costs of approximately $16
million primarily related to website strategic development and marketing.
Depreciation and amortization expense of $40 million and $121 million
for the thirteen and thirty-nine weeks ended October 28, 2000 decreased by 14.9
percent and 12.3 percent, respectively, as compared with the corresponding
prior-year periods. These decreases reflect the reduction in depreciable assets
as a result of the disposal of businesses and stores in 1999 and more focused
capital expenditure programs in 2000 and 1999, as compared with prior years.
Interest expense, net decreased by $9 million and by $22 million for
the thirteen and thirty-nine weeks ended October 28, 2000, respectively, as
compared with the corresponding prior-year periods. These decreases reflect
reduced short-term interest expense related to lower average short-term
borrowing levels, offset in part by higher short-term interest rates, and
reduced long-term interest expense resulting from the repayment of the $200
million 7.0 percent debentures. Interest income, primarily related to income tax
settlements and refunds of $8 million, for the thirty-nine weeks ended October
28, 2000 increased by $2 million compared with the corresponding period in 1999.
Other income of $16 million for the thirty-nine weeks ended October 28,
2000 included corporate real estate gains of $10 million related to property
sales and a $6 million gain associated with the demutualization of the
Metropolitan Life Insurance Company. This compared with $36 million for the
thirty-nine weeks ended October 30, 1999 primarily related to property sales.
The Registrant reported net income for the thirteen and thirty-nine
weeks ended October 28, 2000 of $25 million and $49 million, respectively, or
$0.18 and $0.35 per diluted share. The Registrant reported net income of $8
million or $0.06 per diluted share and a net loss of $25 million or $0.18 per
diluted share for the quarter and year-to-date periods ended October 30, 1999,
respectively. The thirty-nine weeks ended October 30, 1999 included income from
discontinued operations of $10 million after-tax, or $0.07 per diluted share and
income from the cumulative effect of an accounting change of $8 million
after-tax, or $0.06 per diluted share.
-11-
<PAGE> 14
STORE COUNT
The following table summarizes store count by segment, after
reclassification for businesses disposed and held for disposal. During the
thirty-nine weeks ended October 28, 2000, the Registrant remodeled or relocated
75 stores. 239 of the 415 stores closed during the thirty-nine weeks ended
October 28, 2000 related to the 1999 accelerated store-closing program and 34
closures reflected the amalgamation of the Northern Traditions and Northern
Reflections formats in the second quarter of 2000. An additional 39
under-performing stores related to the accelerated store-closing program will be
closed within twelve months, of which 36 are included in the Global Athletic
Group at October 28, 2000.
<TABLE>
<CAPTION>
Jan. 29, Oct. 28, Oct. 30,
2000 Opened Closed 2000 1999
---- ------ ------ ---- ----
<S> <C> <C> <C> <C> <C>
Global Athletic Group.............................................. 3,693 18 96 3,615 3,703
Northern Group..................................................... 836 11 148 699 844
Disposed and held for disposal..................................... 345 2 171 176 1,356
------ ------ --- ------ -----
Total........................................................... 4,874 31 415 4,490 5,903
------ ------ --- ------ -----
</TABLE>
SALES
The following table summarizes sales by segment, after reclassification
for businesses disposed and held for disposal. The disposed and held for
disposal category represents all businesses sold or closed or held for disposal
other than the discontinued segments, and are therefore included in continuing
operations.
<TABLE>
<CAPTION>
(in millions) Thirteen weeks ended Thirty-nine weeks ended
------------------------------- --------------------------------
Oct. 28, 2000 Oct. 30, 1999 Oct. 28, 2000 Oct. 30, 1999
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Global Athletic Group:
Retail Stores........................................ $ 988 $ 917 $ 2,849 $ 2,606
Direct to Customers.................................. 67 53 171 139
------------- ------------- ------------- -------------
1,055 970 3,020 2,745
Northern Group.......................................... 82 92 225 241
Disposed and held for disposal.......................... 23 116 64 334
------------- ------------- ------------- -------------
Total sales $ 1,160 $ 1,178 $ 3,309 $ 3,320
============= ============= ============= =============
</TABLE>
Global Athletic Group sales increased by 8.8 percent and by 10.0
percent for the 2000 third quarter and year-to-date periods as compared with the
corresponding prior-year periods, reflecting comparable-store sales increases of
11.2 percent and 12.1 percent, respectively. Sales from retail store formats
increased by 7.7 percent and by 9.3 percent, respectively, reflecting stronger
sales performance in all formats. Footwear continued to drive the sales growth
across all formats, particularly in the high-end athletic footwear lines such as
the Nike Tuned Air running shoe and the Adidas SL basketball and running shoes.
Private label apparel at the Foot Locker and Lady Foot Locker formats, in
particular the introduction of micro-fiber fleece products at Lady Foot Locker,
has contributed to incremental sales.
Direct to Customers sales increased by 26.4 percent and by 23.0 percent
for the thirteen and thirty-nine weeks ended October 28, 2000 as compared with
the corresponding prior-year periods. Catalog sales increased by 8.0 percent to
$54 million in the third quarter of 2000 and by 6.8 percent to $142 million for
the year-to-date period. Internet sales of $13 million and $29 million,
excluding freight, for the thirteen and thirty-nine weeks ended October 28,
2000, increased by $10 million and $23 million, respectively, as compared with
the corresponding periods in 1999.
Excluding the impact of foreign currency fluctuations, Northern Group
sales declined by 10.6 percent for the third quarter of 2000 and by 6.7 percent
for the year-to-date period. These declines primarily reflect the impact of
operating 111 fewer stores in the United States and Canada in 2000.
Comparable-store sales decreased by 2.7 percent for the third quarter and were
essentially flat for the year-to-date period. As part of the ongoing
reorganization at the Northern Group, the former Northern Traditions stores were
combined with the Northern Reflections format resulting in an overall reduction
of 34 stores.
-12-
<PAGE> 15
OPERATING RESULTS
Operating results reflect income (loss) from continuing operations
before income taxes, excluding corporate expense, corporate gains and net
interest expense. The following table summarizes operating profit (loss) by
segment, after reclassification for businesses disposed and held for disposal.
<TABLE>
<CAPTION>
(in millions) Thirteen weeks ended Thirty-nine weeks ended
--------------------------- -----------------------------
Oct. 28, Oct. 30, Oct. 28, Oct. 30,
2000 1999 2000 1999
--------- --------- ---------- ---------
<S> <C> <C> <C> <C>
Global Athletic Group:
Retail Stores........................................ $ 74 $ 39 $ 188 $ 80
Direct to Customers.................................. 3 - (5) 3
--------- --------- ---------- ---------
77 39 183 83
Northern Group.......................................... (4) 4 (16) (11)
Disposed and held for disposal.......................... (2) (8) (15) (32)
Restructuring charges................................... (4) (3) (9) (67)
--------- --------- ---------- ---------
Total operating profit (loss)........................... $ 67 $ 32 $ 143 $ (27)
========= ========= ========== =========
</TABLE>
The Global Athletic Group's operating profit of $77 million for the
third quarter of 2000 almost doubled as compared with $39 million for the
corresponding prior-year period and increased by $100 million for the 2000
year-to-date period. These significantly improved profitability levels were
largely driven by the Retail Stores business. Operating profit increases of $35
million and $108 million from retail stores for the thirteen and thirty-nine
weeks ended October 28, 2000, respectively, reflected improved sales and gross
margin rate performances in all athletic formats, in a somewhat less promotional
environment. In addition, the Direct to Customers business contributed to the
improved performance in the third quarter of 2000, reporting an operating profit
of $3 million. Direct to Customers operating results for the thirteen and
thirty-nine weeks ended October 28, 2000 included increased Internet strategic
development and marketing costs of approximately $4 million and $15 million,
respectively.
The Northern Group's operating results declined by $8 million and by $5
million, respectively, for the third quarter and year-to-date periods in 2000. A
new merchandise strategy was initiated in Northern Reflections during the third
quarter of 2000, targeting a younger customer base, as part of the ongoing
reorganization of the Northern Group. The initial sales results from this
strategy were disappointing, as comparable-store sales for this period declined
by 2.7 percent. Third quarter results also reflect higher markdown activity to
promote the new product, as well as clear old inventory. If this new merchandise
strategy is not successful, the Registrant may need to take additional steps, as
yet not determined, with regard to the Northern Group.
Restructuring charges of $3 million and $67 million for the thirteen
and thirty-nine weeks ended October 30, 1999 relate to the disposal of the
non-core businesses named in the 1999 restructuring program. The remaining
businesses in the program incurred operating losses of $2 million and $15
million in the 2000 third quarter and year-to-date periods, respectively.
Related to the disposition of these remaining businesses in 2000, the Registrant
recorded a $4 million charge in the third quarter and a net charge of $6 million
for the year-to-date period. In addition, the second quarter of 2000 also
included an additional restructuring charge of $3 million related to the 1999
accelerated store-closing program.
-13-
<PAGE> 16
SEASONALITY
The Registrant's businesses are seasonal in nature. Historically, the
greatest proportion of sales and net income is generated in the fourth quarter
and the lowest proportions of sales and net income are generated in the first
and second quarters, reflecting seasonal buying patterns. As a result of these
seasonal sales patterns, inventory generally increases in the third quarter in
anticipation of strong fourth quarter sales.
LIQUIDITY AND CAPITAL RESOURCES
Generally, the Registrant's primary sources of cash have been from
operations, borrowings under the revolving credit agreement, and proceeds from
the sale of non-strategic assets. The Registrant generally finances real estate
with operating leases. The principal use of cash has been to finance inventory
requirements, which are generally at their peak during the third and fourth
quarters, debt repayment, capital expenditures related to store openings, store
remodelings and management information systems, and to fund other general
working capital requirements.
Operating activities of continuing operations reduced cash by $54
million for the thirty-nine weeks ended October 28, 2000, as compared with $59
million in the corresponding prior-year period. These amounts reflect the income
(loss) from continuing operations reported by the Registrant in those periods,
adjusted for non-cash items and working capital changes. The cash flow from
operations in 2000 was essentially unchanged from 1999 as the inflow from the
Registrant's improved operating performance was offset by the outflow for
merchandise inventories associated with the increased sales volume. Merchandise
inventories, excluding businesses disposed and held for disposal, of $922
million at October 28, 2000 increased by $65 million from $857 million at
October 30, 1999 in anticipation of strong fourth quarter sales. Included in
cash flow from operations for the thirty-nine weeks ended October 28, 2000 were
cash payments of $56 million primarily related to the 1999 restructuring
program.
Net cash used in investing activities of continuing operations was $55
million and $93 million for the thirty-nine weeks ended October 28, 2000 and
October 30, 1999, respectively. Capital expenditures of $69 million for the
thirty-nine weeks ended October 28, 2000 primarily related to store remodelings
as compared with $122 million for the corresponding prior-year period. Planned
capital expenditures of $110 million for 2000 include expenditures for new store
openings, remodeling of existing stores, management information systems,
logistics and other support facilities. Cash proceeds from real estate
disposition activities contributed $7 million in 2000 as compared with $29
million in 1999, reflecting the sale of eleven properties. In the second quarter
of 2000, the Registrant received $7 million in cash as a result of the
demutualizaton of the Metropolitan Life Insurance Company.
Financing activities for the Registrant's continuing operations
utilized cash of $30 million for the thirty-nine weeks ended October 28, 2000
compared to cash provided by financing activities of $56 million for the
corresponding prior-year period. Outstanding borrowings under the Registrant's
revolving credit agreement were $140 million and $300 million at October 28,
2000 and October 30, 1999, respectively, and have been classified as short-term
debt. The total facility at October 28, 2000 was $300 million. During the first
quarter of 2000, the Registrant purchased $12 million of its $200 million 7.0
percent debentures and an additional $1 million on May 10, 2000. On June 1,
2000, the remaining balance of $87 million was repaid with restricted cash funds
set aside on February 15, 2000, as required by the revolving credit agreement.
Management believes current domestic and international credit facilities and
cash provided by operations will be adequate to finance its working capital
requirements and support the development of its short-term and long-term
strategies.
Net cash used in discontinued operations primarily reflects real estate
disposition expenses charged to the Specialty Footwear, International and
Domestic General Merchandise reserves for both periods presented.
-14-
<PAGE> 17
IMPACT OF EUROPEAN MONETARY UNION
The European Union comprises fifteen member states, eleven of which
adopted a common currency, the "euro," effective January 1, 1999. From that date
until January 1, 2002, the transition period, the national currencies will
remain legal tender in the participating countries as denominations of the euro.
Monetary, capital, foreign exchange and interbank markets have converted to the
euro and non-cash transactions are possible in euros. On January 1, 2002, euro
bank notes and coins will be issued and the former national currencies will be
withdrawn from circulation no later than July 1, 2002.
The Registrant has reviewed the impact of the euro conversion on its
information systems, accounting systems, vendor payments and human resources,
and the necessary modifications, if any, are substantially in place. Plans to
upgrade or modify the point of sale hardware and software are in progress and
will be executed throughout the remainder of 2000 and 2001.
The adoption of a single European currency will lead to greater product
pricing transparency and a more competitive environment. The Registrant will
display the euro equivalent price of merchandise as a customer service during
the transition period, as will many retailers, until the official euro
conversion in 2002. The euro conversion is not expected to have a significant
effect on the Registrant's results of operations or financial condition.
DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS
Management's Discussion and Analysis of Financial Condition and
Results of Operations contains forward-looking statements within the meaning of
the federal securities laws. All statements, other than statements of historical
facts, which address activities, events or developments that the Registrant
expects or anticipates will or may occur in the future, including, but not
limited to, such things as future capital expenditures, expansion, strategic
plans, growth of the Registrant's business and operations and euro related
actions and other such matters are forward-looking statements. These
forward-looking statements are based on many assumptions and factors including,
but not limited to, effects of currency fluctuations, customer demand, fashion
trends, competitive market forces, uncertainties related to the effect of
competitive products and pricing, customer acceptance of the Registrant's
merchandise mix and retail locations, economic conditions worldwide, the ability
of the Registrant to execute its business plans effectively with regard to each
of its operating units, and the ability of the Registrant to implement, in a
timely manner, the programs and actions related to the euro issue. Any changes
in such assumptions or factors could produce significantly different results.
The Registrant undertakes no obligation to publicly update forward-looking
statements, whether as a result of new information, future events or otherwise.
-15-
<PAGE> 18
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
The only legal proceedings pending against the Registrant or its
consolidated subsidiaries consist of ordinary, routine litigation,
including administrative proceedings, incident to the businesses of the
Registrant, as well as litigation incident to the sale and disposition
of businesses that have occurred in the past several years. Management
does not believe that the outcome of such proceedings will have a
material effect on the Registrant's consolidated financial position,
liquidity, or results of operations.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
An index of the exhibits that are required by this item, and which are
furnished in accordance with Item 601 of Regulation S-K, appears on
pages 18 through 19. The exhibits which are in this report immediately
follow the index.
(b) Reports on Form 8-K
The Registrant filed a report on Form 8-K dated August 17, 2000 (date
of earliest event reported) reporting operating results for the second
quarter ended July 29, 2000.
-16-
<PAGE> 19
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.
<TABLE>
<S> <C>
VENATOR GROUP, INC.
-------------------
(Registrant)
Date: December 12, 2000
/s/ Bruce Hartman
-------------------
BRUCE HARTMAN
Senior Vice President
and Chief Financial Officer
</TABLE>
-17-
<PAGE> 20
VENATOR GROUP, INC.
INDEX OF EXHIBITS REQUIRED BY ITEM 6(a) OF FORM 10-Q
AND FURNISHED IN ACCORDANCE WITH ITEM 601 OF REGULATION S-K
<TABLE>
<CAPTION>
Exhibit No. in Item 601
of Regulation S-K Description
----------------- -----------
<S> <C>
3(i)(a) Certificate of Incorporation of the Registrant, as filed by the
Department of State of the State of New York on April 7, 1989
(incorporated herein by reference to Exhibit 3(i)(a) to the Quarterly
Report on Form 10-Q for the quarterly period ended July 26, 1997,
filed by the Registrant with the SEC on September 4, 1997 (the "July
26, 1997 Form 10-Q")).
3(i)(b) Certificates of Amendment of the Certificate of Incorporation of the
Registrant, as filed by the Department of State of the State of New
York on (a) July 20, 1989 (b) July 24, 1990 (c) July 9, 1997
(incorporated herein by reference to Exhibit 3(i)(b) to the July 26,
1997 Form 10-Q) and (d) June 11, 1998 (incorporated herein by
reference to Exhibit 4.2(a) of the Registration Statement on Form
S-8 (Registration No. 333-62425) previously filed with the SEC).
3(ii) By-laws of the Registrant, as amended (incorporated herein by
reference to Exhibit 4.2 of the Registration Statement on Form S-8
(Registration No. 333-62425) previously filed with the SEC).
4.1 The rights of holders of the Registrant's equity securities are
defined in the Registrant's Certificate of Incorporation, as amended
(incorporated herein by reference to Exhibits 3(i)(a) and 3(i)(b) to
the July 26, 1997 Form 10-Q and Exhibit 4.2(a) to the Registration
Statement on Form S-8 (Registration No. 333-62425) previously filed
with the SEC).
4.2 Rights Agreement dated as of March 11, 1998 ("Rights Agreement"),
between Venator Group, Inc. and First Chicago Trust Company of New
York, as Rights Agent (incorporated herein by reference to Exhibit 4
to the Form 8-K dated March 11, 1998).
4.2(a) Amendment No. 1 to the Rights Agreement, dated as of May 28, 1999
(incorporated herein by reference to Exhibit 4.2(a) to the
Quarterly Report on Form 10-Q for the quarterly period ended May 1,
1999, filed by the Registrant with the SEC on June 4, 1999).
4.3 Indenture dated as of October 10, 1991 (incorporated herein by
reference to Exhibit 4.1 to the Registration Statement on Form S-3
(Registration No. 33-43334) previously filed with the SEC).
</TABLE>
-18-
<PAGE> 21
<TABLE>
<CAPTION>
Exhibit No. in Item 601
of Regulation S-K Description
----------------- -----------
<S> <C>
4.4 Forms of Medium-Term Notes (Fixed Rate and Floating Rate)
(incorporated herein by reference to Exhibits 4.4 and 4.5 to the
Registration Statement on Form S-3 (Registration No. 33-43334)
previously filed with the SEC).
4.5 Form of 8 % Debentures due 2022 (incorporated herein by reference to
Exhibit 4 to the Registrant's Form 8-K dated January 16, 1992).
4.6 Distribution Agreement dated July 13, 1995 and Forms of Fixed Rate and
Floating Rate Notes (incorporated herein by reference to Exhibits 1,
4.1 and 4.2, respectively, to the Registrant's Form 8-K dated July 13,
1995).
12 Computation of Ratio of Earnings to Fixed Charges.
15 Letter re: Unaudited Interim Financial Statements.
27.1 Financial Data Schedule - October 28, 2000 (which is submitted
electronically to the SEC for information only and not filed).
27.2 Restated Financial Data Schedule - October 30, 1999 (which is
submitted electronically to the SEC for information only and not
filed).
99 Independent Accountants' Review Report.
</TABLE>
-19-
<PAGE> 22
Exhibits filed with this Form 10-Q:
<TABLE>
<CAPTION>
Exhibit No. Description
----------- -----------
<S> <C>
12 Computation of Ratio of Earnings to Fixed Charges.
15 Letter re: Unaudited Interim Financial Statements.
27.1 Financial Data Schedule - October 28, 2000.
27.2 Restated Financial Data Schedule - October 30, 1999.
99 Independent Accountants' Review Report.
</TABLE>
