<PAGE> 1
FORM 10-Q QUARTERLY REPORT
Securities & Exchange Commission
Washington, D.C. 20549
Pursuant to Section 13 or 15 (d) of the Securities Exchange Act of 1934
For the quarterly period ended May 4, 1996
Commission file number 1-10745
THE CALDOR CORPORATION
A Delaware corporation
IRS employer identification no. 06-1282044
20 Glover Avenue, Norwalk, CT 06856-5620
Telephone Number (203) 846-1641
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 [ ]
The number of shares of Common Stock of the registrant outstanding as of the
close of business on June 7, 1996 was 16,870,793.
<PAGE> 2
THE CALDOR CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in thousands, except per share amounts)
(Unaudited)
<TABLE>
<CAPTION>
FOR THE 13 WEEKS ENDED:
--------------------------------
MAY 4, 1996 APRIL 29, 1995
----------- --------------
<S> <C> <C>
NET SALES $ 568,560 $ 564,250
COST OF GOODS SOLD 426,160 407,703
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES 168,524 161,488
INTEREST EXPENSE, NET 8,396 10,087
--------- ---------
LOSS BEFORE REORGANIZATION ITEMS,
EXTRAORDINARY ITEM AND INCOME TAXES (34,520) (15,028)
REORGANIZATION ITEMS (Note 4) 8,761
--------- ---------
LOSS BEFORE EXTRAORDINARY ITEM
AND INCOME TAXES (43,281) (15,028)
INCOME TAX BENEFIT (Note 6) (5,786)
--------- ---------
LOSS BEFORE EXTRAORDINARY ITEM (43,281) (9,242)
EXTRAORDINARY LOSS (NET OF INCOME TAX
BENEFIT OF $3,232) (Note 5) (5,164)
--------- ---------
NET LOSS $ (43,281) $ (14,406)
========= =========
PER SHARE AMOUNTS:
LOSS BEFORE EXTRAORDINARY ITEM $ (2.57) $ (0.55)
========= =========
NET LOSS $ (2.57) $ (0.86)
========= =========
WEIGHTED AVERAGE COMMON AND COMMON
EQUIVALENT SHARES USED IN COMPUTING PER
SHARE AMOUNTS 16,857 16,751
========= =========
</TABLE>
See notes to consolidated financial statements
- 2 -
<PAGE> 3
THE CALDOR CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands, except share data)
(Unaudited)
<TABLE>
<CAPTION>
MAY 4, 1996 FEBRUARY 3, 1996
----------- ----------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents $ 42,738 $ 25,577
Accounts receivable 20,645 18,059
Merchandise inventories 589,613 499,948
Assets held for disposal, net 20,607 25,265
Refundable income taxes 3,144 5,380
Prepaid expenses and other current assets 17,978 17,047
----------- -----------
Total current assets 694,725 591,276
----------- -----------
Property and equipment, net 546,197 551,977
Debt issuance costs 3,987 4,674
Deferred income taxes 16,626 16,626
Other assets 9,936 9,466
----------- -----------
$ 1,271,471 $ 1,174,019
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)
Current liabilities:
Accounts payable $ 197,121 $ 156,240
Accrued expenses 64,673 70,835
Other accrued liabilities 54,558 52,836
Borrowings under revolving credit agreement 152,500 40,000
----------- -----------
Total current liabilities 468,852 319,911
----------- -----------
Long-term debt 269,596 260,785
Other long-term liabilities 26,394 25,158
Liabilities subject to compromise (Note 3) 512,913 530,957
Stockholders' equity (deficit):
Preferred stock, par value $.01-
authorized, 10,000,000 shares;
issued and outstanding, none
Common stock, par value $.01-
authorized, 50,000,000 shares;
issued and outstanding, 16,856,917
and 16,921,433 shares, respectively 169 170
Additional paid-in capital 202,748 205,047
Deficit (206,766) (163,485)
Unearned compensation (2,435) (4,524)
----------- -----------
Total stockholders' equity (deficit) (6,284) 37,208
----------- -----------
$ 1,271,471 $ 1,174,019
=========== ===========
</TABLE>
See notes to consolidated financial statements
-3-
<PAGE> 4
THE CALDOR CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
(Dollars in thousands)
(Unaudited)
<TABLE>
<CAPTION>
OUTSTANDING
COMMON STOCK ADDITIONAL
------------ PAID-IN RETAINED UNEARNED STOCKHOLDERS'
SHARES AMOUNT CAPITAL EARNINGS COMPENSATION EQUITY
------ ------ ------- -------- ------------ ------
<S> <C> <C> <C> <C> <C> <C>
BALANCE, FEBRUARY 3, 1996 16,921,433 $ 170 $ 205,047 ($163,485) ($4,524) $ 37,208
CANCELLATION OF RESTRICTED STOCK (64,516) (1) (2,299) 1,918 (382)
AMORTIZATION OF UNEARNED
COMPENSATION 171 171
NET LOSS (43,281) (43,281)
----------- -------- --------- --------- ------- --------
BALANCE, MAY 4, 1996 16,856,917 $ 169 $ 202,748 ($206,766) ($2,435) ($ 6,284)
=========== ======== ========= ========= ======= ========
</TABLE>
See notes to consolidated financial statements
- 4 -
<PAGE> 5
THE CALDOR CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
(Unaudited)
<TABLE>
<CAPTION>
FOR THE 13 WEEKS ENDED:
-----------------------
MAY 4, 1996 APRIL 29, 1995
----------- --------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (43,281) $ (14,406)
Expenses not requiring the outlay of cash:
Amortization of debt issuance costs 400 225
Depreciation and other amortization 11,992 11,647
Extraordinary loss on early retirement of debt 3,471
Amortization of unearned compensation 171
Reorganization Items 8,761
Working capital and other (46,098) (104,084)
--------- ---------
Net cash used in operating activities
before reorganization items (68,055) (103,147)
Reduction of liabilities subject to compromise (12,291)
Reorganization items (12,052)
--------- ---------
Net cash used in operating activities (92,398) (103,147)
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (6,462) (12,468)
Acquisition of leasehold interests (5,043)
--------- ---------
Net cash used in investing activities (6,462) (17,511)
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Retirement of Senior Secured Notes (59,500)
Proceeds from borrowing under Term Loan 50,000
Proceeds from issuance of common stock
and exercise of stock options 119
Repayment of construction loan previously subject to
compromise (5,753)
Proceeds from borrowings under construction loans 9,274
Proceeds from borrowings under revolving credit agreement 112,500 142,097
Repayment of long-term debt (1,295)
--------- ---------
Net cash provided by financing activities 116,021 131,421
--------- ---------
Increase (decrease) in cash and cash equivalents 17,161 10,763
Cash and cash equivalents, beginning of period 25,577 21,100
--------- ---------
Cash and cash equivalents, end of period $ 42,738 $ 31,863
========= =========
</TABLE>
See notes to consolidated financial statements
- 5 -
<PAGE> 6
THE CALDOR CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
(Unaudited)
<TABLE>
<CAPTION>
FOR THE 13 WEEKS ENDED:
-----------------------
MAY 4, 1996 APRIL 29, 1995
----------- --------------
<S> <C> <C>
WORKING CAPITAL AND OTHER COMPRISED OF:
Accounts receivable $ (2,586) $ (1,358)
Merchandise inventories (89,665) (97,160)
Prepaid expenses and other current assets (932) (4,163)
Assets held for disposal, net 4,658
Refundable income taxes 2,236
Accounts payable 40,881 17,913
Accrued expenses (6,162)
Federal and state income taxes payable 1,068
Other accrued liabilities 4,850 (20,202)
Other assets and long-term liabilities 622 (182)
--------- ---------
$ (46,098) $(104,084)
========= =========
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash interest paid $ 6,949 $ 10,260
========= =========
Income taxes paid $ 347 $ 6,956
========= =========
</TABLE>
See notes to consolidated financial statements.
- 6 -
<PAGE> 7
THE CALDOR CORPORATION AND
SUBSIDIARIES
Notes to Consolidated Financial Statements
(in thousands except per share data)
1. BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements of The
Caldor Corporation (the "Registrant") and subsidiaries (collectively,
the "Company") have been prepared in accordance with generally accepted
accounting principles for interim financial information and the
instructions for Form 10-Q applicable to a going concern, which
principles, except as otherwise disclosed, assume that assets will be
realized and liabilities will be discharged in the normal course of
business. The Registrant and certain of its subsidiaries (collectively,
the "Debtors") filed petitions for relief under Chapter 11 of the
United States Bankruptcy Code ("Chapter 11") on September 18, 1995 (the
"Filing"). The Debtors are presently operating their business as
debtors-in-possession subject to the jurisdiction of the United States
Bankruptcy Court for the Southern District of New York (the "Bankruptcy
Court").
With respect to the unaudited consolidated financial statements for the
thirteen weeks ended May 4, 1996, it is the Registrant's opinion that
all necessary adjustments (consisting of normal and recurring
adjustments) have been included to present a fair statement of results
for the interim period.
These statements should be read in conjunction with the Company's
financial statements included in the Registrant's Annual Report on Form
10-K for the fiscal year ended February 3, 1996. Due to the seasonal
nature of the Company's sales and the Filing, operating results for the
interim period are not necessarily indicative of results that may be
expected for the fiscal year ending February 1, 1997. Certain
information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted pursuant to the rules and
regulations promulgated by the Securities and Exchange Commission.
Certain reclassifications have been made to the prior period's
financial statements to conform with classifications used in the
current period.
2. REORGANIZATION CASE
In the Chapter 11 case, substantially all liabilities as of the date of
the Filing are subject to resolution under a plan of reorganization to
be voted upon by the Debtors' creditors and stockholders and confirmed
by the Bankruptcy Court. Amended and Restated Schedules have been filed
by the Debtors with the Bankruptcy Court setting forth the assets and
liabilities of the Debtors as of the date of the Filing as shown by the
Debtors' accounting records. Differences between amounts shown by the
Debtors and claims filed by creditors will be investigated and
reconciled. The amount and settlement terms for such disputed
liabilities are subject to allowance by the Bankruptcy Court.
Ultimately the adjustment of the total liabilities of the Debtors
remains subject to a Bankruptcy Court approved plan of reorganization,
and, accordingly, the amount of such liabilities is not presently
determinable. Pursuant to
7
<PAGE> 8
the Bankruptcy Code, the Debtors presently possess the exclusive right
to file a plan of reorganization during the period through July 31,
1996, subject to increase or decrease of the period by the Bankruptcy
Court.
Under the Bankruptcy Code, the Debtors may elect to assume or reject
real estate leases, employment contracts, personal property leases,
service contracts and other executory pre-petition contracts, subject
to Bankruptcy Court approval. As part of the Debtor's review of its
operations, the Debtor in 1995 identified 12 under-performing stores
which it is in the process of closing. On April 12, 1996, the
Bankruptcy Court approved the closing of the 12 stores which have now
been turned over to a liquidator. The Debtors continue to review leases
and contracts, as well as other operational and merchandising changes,
and cannot presently determine or reasonably estimate the ultimate
outcome of, or liability resulting from, this review. Additional
information with respect to the Debtors' Chapter 11 case is set forth
in the Registrant's Annual Report on Form 10-K for the fiscal year
ended February 3, 1996.
8
<PAGE> 9
3. LIABILITIES SUBJECT TO COMPROMISE
Liabilities subject to compromise are as follows:
<TABLE>
<CAPTION>
May 4, 1996 February 3, 1996
----------- ----------------
<S> <C> <C>
Accounts payable $265,905 $265,249
Rejected leases and other
miscellaneous claims 109,087 109,087
Accrued expenses 79,029 90,343
Capital lease obligations 43,623 45,234
Construction loans 11,511 17,264
Industrial revenue bonds
and mortgage notes 3,758 3,780
-------- --------
Total $512,913 $530,957
</TABLE>
Liabilities subject to compromise were reduced by payments approved by
the Bankruptcy Court for sales and use tax and for refinancing of the
construction loan relating to the Silver Spring, MD store. In addition,
capital lease obligations were reduced by normal amortization.
4. REORGANIZATION ITEMS
Reorganization items consisted of the following:
<TABLE>
<S> <C>
Retention costs $ 2,630
Professional fees 4,569
Other 1,562
---------
Total provision for reorganization 8,761
Cash payments (11,302)
Other (1,050)
---------
(3,591)
Accrual balance - February 3, 1996 136,530
---------
Accrual balance - May 4, 1996 $ 132,939
</TABLE>
5. EXTRAORDINARY ITEM
During February 1995, the Company amended its credit agreement to
increase the amortizing term loan to $215 million. Using $50 million in
term loan borrowings and $16 million of non-amortizing revolver
borrowings, the Company executed, on February 7, 1995, an in-substance
defeasance of the outstanding 15% Senior Subordinated Notes (the
"Notes") by depositing $66 million of U.S. Government Securities into
an irrevocable trust to cover the redemption value (including
principal, call premium and interest) of the Notes on June 1, 1995, at
which time the Notes were called. For financial reporting purposes, the
Notes were considered extinguished during the first quarter of fiscal
1995, and the defeasance transaction resulted in an after-tax
extraordinary loss of $5.2 million. During the fourth quarter of fiscal
1995, the previously recorded tax benefit of $3.2 million from this
extraordinary loss was reversed and allocated to continuing operations.
9
<PAGE> 10
6. INCOME TAXES
Income taxes are provided based on the asset and liability method of
accounting pursuant to Statement of Financial Accounting Standards No.
109, "Accounting for Income Taxes." Utilization of the Company's loss
carryforwards is dependent upon sufficient future taxable income. The
Company has established a full valuation allowance against these
carryforward benefits and, therefore, has not recorded any tax benefits
related to first quarter 1996 losses.
7. RECENT ACCOUNTING PRONOUNCEMENTS
The Company has adopted Statement of Financial Accounting Standards No.
121, "Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to Be Disposed Of" ("SFAS No.121") during first
quarter 1996. The adoption of this statement did not have an impact on
the Company's results of operations. As part of the ongoing review of
its operations, the Company is currently negotiating with landlords
regarding rent reductions and lease restructurings. In the event the
Company does not achieve certain expected rent reductions, the Company
could incur an impairment charge for certain of its properties.
In October 1995, the Financial Accounting Standards Board issued SFAS
No. 123, "Accounting for Stock-Based Compensation" ("SFAS No. 123"),
which is effective for the Company beginning February 4, 1996. SFAS No.
123 requires expanded disclosures of stock-based compensation
arrangements with employees and encourages (but does not require)
compensation expense to be measured based on the fair value of the
equity instrument awarded. Companies are permitted, however, to
continue to apply Accounting Principles Board Opinion No. 25 ("APB No.
25"), which recognizes compensation costs based on the intrinsic value
of the equity instrument awarded. The Company will continue to apply
APB No. 25 to its stock-based compensation awards to employees and will
disclose the required pro-forma effects on net income and earnings per
share.
10
<PAGE> 11
ITEM 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
OVERVIEW
The Registrant and certain of its subsidiaries (collectively, the "Debtors")
filed petitions for relief under Chapter 11 of the United States Bankruptcy
Code ("Chapter 11") on September 18, 1995 (the "Filing"). The Debtors are
presently operating their business as debtors-in-possession subject to the
jurisdiction of the United States Bankruptcy Court for the Southern District of
New York (the "Bankruptcy Court"). As a result of the Filing, the cash
requirements for the payment of accounts payable and certain other liabilities
that arose prior to the Filing are in most cases deferred until a plan of
reorganization is approved by the Bankruptcy Court.
RESULTS OF OPERATIONS
QUARTER ENDED MAY 4, 1996 ("FIRST QUARTER 1996") AS COMPARED TO QUARTER ENDED
APRIL 29, 1995 ("FIRST QUARTER 1995"):
Sales for First Quarter 1996 increased by $4.3 million, or 0.8%, to $568.6
million from $564.3 million for First Quarter 1995. New stores contributed
$19.7 million in sales. Same store sales for First Quarter 1996 decreased by
0.7% from First Quarter 1995.
Gross margin for First Quarter 1996 decreased by $14.1 million from First
Quarter 1995. Gross margin as a percentage of sales for First Quarter 1996
decreased by 2.7% to 25.0% from 27.7% in First Quarter 1995. The decrease was
mainly attributable to higher promotional markdowns taken on merchandise,
increased competitive pricing and an increase in the reserve for shrinkage.
Selling, general and administrative expenses for First Quarter 1996 increased as
a percentage of sales to 29.6% compared to 28.6% in First Quarter 1995. This
increase was mainly attributable to higher advertising costs in First Quarter
1996 due to higher industry-wide paper costs associated with the printing of its
weekly circulars and the reinstitution of television advertisements. The
increase was also attributable to an increase in costs resulting from new stores
in urban markets, which have higher rent structures and higher related costs
such as real estate taxes, and increases in insurance related reserves.
Interest expense, net, for First Quarter 1996 decreased as a percentage of sales
to 1.5% compared to 1.8% for First Quarter 1995. The decrease was primarily due
to a decrease in average short-term borrowings and a decrease in average short
term interest rates in First Quarter 1996.
Average monthly revolving credit borrowings were $110.2 million at a weighted
average interest rate of 6.6% in First Quarter 1996 compared to $186.9
million at 7.3% for First Quarter 1995. The weighted average interest rate of
the Term Loan was 6.3% in First Quarter 1996 compared to 6.9% in First Quarter
1995.
Loss before reorganization items, extraordinary item and income taxes was $34.5
million for First Quarter 1996 as compared to a loss of $15.0 million in First
Quarter 1995. After reorganization costs of $8.8 million in First Quarter 1996
and an extraordinary loss of $5.2 million in First Quarter 1995, the Company
realized a net loss for the First Quarter 1996 of $43.3 million, or $2.57 per
share, as compared to a net loss of $14.4 million, or $0.86 per share, in First
Quarter 1995.
FINANCIAL CONDITION
The Company's working capital for First Quarter 1996 decreased by approximately
$45.5 million from February 3, 1996. The inventory levels have increased $89.7
million due to new stores opening in Spring of 1996 as well as normal seasonal
increases. The $40.9 million increase in accounts payable is due to the
increased inventories along with a significant improvement and stabilization of
credit support from its vendors since the initial disruption caused by the
Filing.
On October 17, 1995, the Bankruptcy Court entered a final order approving the
Debtor-in-Possession financing arrangement ( the "DIP Facility") as provided
under the Amended and
11
<PAGE> 12
Restated Revolving Credit and Guaranty Agreement dated as of October 17, 1995,
among the Registrant, as the borrower thereunder, the subsidiaries of the
Registrant named therein, as the guarantors thereunder and a bank group led by
Chemical Bank. The DIP Facility amends and restates the Registrant's
Debtor-In-Possession Revolving Credit and Guaranty Agreement dated as of
September 18, 1995 with Chemical as agent in its entirety. Pursuant to the terms
of the DIP Facility, as amended, the Banks have made available to the Registrant
a revolving credit and letter of credit facility in an aggregate principal
amount, at May 4, 1996, not to exceed a total of $442.4 million, divided into
two (2) separate tranches consisting of (i) a post-petition revolving credit and
letter of credit facility in an aggregate principal amount not to exceed $200
million (reflecting a $50 million line reduction on May 4, 1996), to be made
available by the Tranche A Banks secured by all of the Debtors' assets including
inventory, and (ii) the continued use of the pre-petition revolving credit and
letter of credit facility made available by the Tranche B Banks in an aggregate
principal amount of $242.4 million which principal amount may be borrowed, paid
and reborrowed. The Registrant's maximum borrowing under the Tranche A Facility,
up to $200 million, may not exceed the lesser of 60% of Eligible Cost Value of
Inventory or 50% of Eligible Retail Value of Inventory. The DIP Facility has a
sublimit of $175 million for the issuance of letters of credit. A line reduction
of $50 million will occur on October 4, 1996 if the Tranche A borrowings, less
cash and marketable securities over $5 million, are less than $120 million on
such date. The Tranche B facility must be fully utilized before the Registrant
can borrow under the Tranche A Facility. The DIP Facility expires on September
18, 1997.
Borrowings under the DIP Facility may be used to fund working capital, inventory
purchases and for other general corporate purposes. The DIP Facility contains
restrictive covenants, including, among other things, limitations on the
creation of additional liens and indebtedness, limitations on capital
expenditures, the sale of assets, the maintenance of minimum earnings before
interest, taxes, depreciation and amortization starting with the fiscal quarter
ending May 4, 1996, the maintenance of inventory levels, and a prohibition on
the payment of dividends.
The DIP Facility provides that advances made (i) under the Tranche A Facility
will bear interest at a rate of 0.5% per annum in excess of ABR, or at the
Registrant's option, a rate of 1.5% per annum in excess of the reserve adjusted
LIBOR for the interest periods of one, three or six months or (ii) under the
Tranche B Facility will bear interest at ABR or at a rate of 0.75% per annum in
excess of LIBOR.
Under the Tranche A Facility, the Registrant pays a commitment fee of 0.5% per
annum on the unused portion thereof, a letter of credit fee equal to 1.5% per
annum of average outstanding letters of credit and certain other fees. Under the
Tranche B Facility, the Registrant pays a commitment fee of 0.3125% per annum on
the unused portion thereof, a letter of credit fee equal to 0.75% per annum of
average outstanding letters of credit and certain other fees. The Tranche A
Facility and the Tranche B Facility expire on the earlier of September 18, 1997
or the date of entry of an order by the Bankruptcy Court confirming a plan of
reorganization.
The Tranche A Banks and the Tranche B Banks were granted a lien on all of the
assets of the Debtors and a superpriority claim for all obligations of the
Debtors arising under the Tranche A Facility and the Tranche B Facility,
respectively. However, the claim of the Tranche B Banks is subordinate in
priority to the claim of the Tranche A Banks. In addition, Chemical, as agent,
was granted a security interest in all of the shares of capital stock now or
hereafter issued to the Registrant by certain of its subsidiaries.
As of May 4, 1996, the outstanding borrowings under the DIP Facility were $152.5
million.
For the First Quarter 1996, $6.5 million was spent for capital expenditures
compared to $17.5 million in First Quarter 1995. The Company's capital
expenditures for 1996 are projected to be approximately $50 million to be used
for a regional distribution center, new stores, management information systems
and store maintenance improvements.
The Company borrowed $9.3 million in the First Quarter 1996 under a
construction loan relating to the Silver Spring, MD store. The proceeds of
this loan were used to refinance an existing $5.8 million construction loan and
the remaining proceeds were used for capital expenditures for such store.
The Company believes that cash on hand, refundable income taxes, amounts
available under the DIP Facility, proceeds from the construction loan,
utilization of capital leases and funds from operations, will enable the
Company to meet its current liquidity and capital expenditure requirements.
Until a plan of reorganization is approved, the Company's long-term liquidity
and the adequacy of its capital resources cannot be determined.
12
<PAGE> 13
The Company continues to consider merchandising and operational changes and
review its leases and contracts, and cannot presently determine or reasonably
estimate the ultimate outcome of this review.
FACTORS THAT MAY AFFECT FUTURE RESULTS
From time to time, information provided by the Company, statements made by its
employees or information included in its filings with the SEC (including the
Quarterly Report on Form 10-Q) may contain statements which are not historical
facts, so-called "forward-looking statements", which involve risks and
uncertainties. In particular, statements in "Management's Discussion and
Analysis of Financial Condition and Results of Operations" may be
forward-looking statements. The Company's actual future results may differ
significantly from those stated in any forward-looking statements. Factors that
may cause such differences include, but are not limited to, the factors
discussed below. Each of these factors, and others, are discussed from time to
time in the Company's filings with the SEC.
The Company's future results are subject to substantial risks and uncertainties.
The Company is operating as a debtor-in-possession under the Bankruptcy Code and
its future results are subject to the development and confirmation of a plan of
reorganization. The Company's business is seasonal; a majority of its sales and
income from operations are generated during the fourth quarter of the fiscal
year which includes the Christmas selling season. Any substantial decrease in
sales during such period would have a material adverse effect on the financial
condition and results of operations of the Company. The Company has working
capital needs which are expected to be funded largely through borrowings under
the DIP Facility. The DIP Facility contains financial and other covenants that
restrict, among other things, the ability of the Company and its subsidiaries to
incur additional indebtedness, create liens, pay dividends on or repurchase
shares of capital stock, and make certain loans, investments or guarantees. Such
restrictions may limit the Company's operating and financial flexibility. For
further information, see "Management's Discussion and Analysis of Financial
Condition and Results of Operations -- Financial Condition".
13
<PAGE> 14
PART II: OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
None
14
<PAGE> 15
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
a) Exhibits
<TABLE>
<CAPTION>
Exhibit Number Description
-------------- -----------
<S> <C>
3 (ii) Bylaws, as amended, of the Registrant
</TABLE>
b) Reports on Form 8-K
During the fiscal quarter covered by this Report, the
Registrant filed a Current Report on Form 8-K for an event
that occurred on March 6, 1996. The filing reported on Item 5,
and no financial statements were included in such filing.
15
<PAGE> 16
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
The Caldor Corporation
(Registrant)
Date: June 18, 1996 By: /s/ Don R. Clarke
---------------------- -------------------------------
Chairman and Chief Executive Officer
Date: June 18, 1996 By: /s/ John G. Reen
---------------------- ----------------------------------
Executive Vice President - Finance
Chief Financial Officer
16
<PAGE> 17
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit Number Description
-------------- -----------
<S> <C>
3 (ii) Bylaws, as amended, of the Registrant
10.1 Employment Agreement dated as of April 15, 1996
between the Registrant and Warren D. Feldberg
("the Employment Agreement")
10.1 (I) Amendment dated June , 1996 to the Employment
Agreement between the Registrant and Warren D.
Feldberg
27 Financial Data Schedule
</TABLE>
<PAGE> 1
AMENDMENT NUMBER 1
TO THE
BY-LAWS
OF
THE CALDOR CORPORATION
Pursuant to the action of the Board of Directors of The Caldor Corporation (the
"Corporation"), taken at the meeting of the Board of Directors on April 16,
1996, the By-Laws of the Corporation are hereby amended to delete Section 3(b)
of Article III thereof inits entirely, and insert in place of such Section the
following:
"(b) PRESIDENT. The President shall, subject to the direction and
under the supervision of the Board of Directors and any other officer
selected by the Board of Directors to supervise the President, have such
powers and perform such duties as generally pertain to the office of
President, as well as such further powers and duties as may be prescribed
by the Board of Directors."
Except as specifically amended hereby, in all other respects the By-Laws of the
Corporation remain in full force and effect.
<PAGE> 2
BY-LAWS
OF
CAL HOLDINGS INC.
(A Delaware Corporation)
ARTICLE I
STOCKHOLDERS
1. RECORD DATE FOR STOCKHOLDERS. For the purpose of determining the
stockholders entitled to (i) notice of or to vote at any meeting of stockholders
or any adjournment thereof, the directors may fix, in advance, a record date,
which shall not be more than sixty days nor less than ten days before the date
of such meeting; (ii) consent to corporate action in writing without a meeting,
the directors may fix a record date, which shall not be more than ten days after
such resolution is adopted by the Board; or (iii) receive payment of any
dividend or other distribution or allotment of any dividend or other
distribution or allotment of any rights, exercise any rights in respect of any
change, conversion or exchange of stock, or, for the purpose of any other lawful
action, the directors may fix a record date which shall not be more than sixty
days prior to such action. In no event shall the record date for any of the
above purposes precede the date upon which the resolution fixing the record date
is adopted by the Board of Directors. If no record date is fixed, the record
date for determining stock-holders entitled to notice of or to vote at a meeting
of stockholders shall be at the close of business on the day next preceding the
day on which notice is given, or, if notice is waived, at the close of business
on the day next preceding the day on which the meeting is held; the record date
for determining stockholders entitled to consent to corporation action in
writing without a meeting, when no prior action by the Board of Directors is
necessary, shall be the first date on which a signed written consent is
delivered to the Corporation in the manner provided by the Delaware General
Corporation Law (the "General Corporation Law") and if prior action is required,
such record date shall be at the close of business on the date on which the
Board of Directors adopts a resolution taking such prior action; and the record
date for determining stockholders for any other purpose, including the purposes
described in clause (iii) above, shall be at the close of business on the day
on-which the Board of Directors adopts the resolution relating thereto. A
determination of stockholders of record entitled to notice of or to vote at any
meeting of stockholders shall apply to any adjournment of the meeting; PROVIDED,
HOWEVER, that the Board of Directors may fix a new record date for the adjourned
meeting.
2. MEANING OF CERTAIN TERMS. As used herein in respect of the right to
notice of a meeting of stockholders or a waiver thereof or to participate or
vote thereat or to consent or dissent in writing in lieu of a meeting, as the
case may be, the term "share" or "shares" or "share of stock" or "shares of
stock" or "stockholder" or "stockholders" refers to (i) an
<PAGE> 3
outstanding share or shares of stock and to a holder or holders of record of
outstanding shares of stock when the Corporation has only one class of shares of
stock outstanding and (ii) any outstanding share or shares of stock and any
holder or holders of record of outstanding shares of stock of any class upon
which or upon whom the Certificate of Incorporation or a resolution of the Board
of Directors theretofore certified and effective pursuant to Section 151 of the
General Corporation Law confers such rights when the Corporation has two or more
classes or series of shares of stock outstanding or upon which or upon whom the
General Corporation Law confers such rights notwithstanding that the Certificate
of Incorporation may provide for more than one class or series of shares of
stock, one or more of which are limited or denied such rights thereunder.
3. STOCKHOLDER MEETINGS.
- TIME. The annual meeting for the election of directors and for the
transaction of such other business as may properly come before the meeting shall
be held on the date and at the time fixed, from time to time, by the directors.
A special meeting for the transaction of such business as may properly come
before the meeting shall be held on the date and at the time fixed by the
directors.
- PLACE. Annual meetings and special meetings shall be held at such
place, within or without the State of Delaware, as the directors may, from time
to time, fix. Whenever the directors shall fail to fix such place, the meeting
shall be held at the principal executive office of the Corporation.
- CALL. Annual meetings and special meetings may be called by the
directors or by any officer instructed by the directors to call the meeting.
- NOTICE OR WAIVER OF NOTICE. Written notice of all meetings shall be
given, stating the place, date, and hour of the meeting and stating the place
within the city or other municipality or community at which the list of
stockholders of the Corporation may be examined. The notice of an annual meeting
shall state that the meeting is called for the election of directors and for the
transaction of other business which may properly come before the meeting, and
shall, (if any other action which could be taken at a special meeting is to be
taken at such annual meeting) state the purpose or purposes. The notice of a
special meeting shall in all instances state the purpose or purposes for which
the meeting is to be called. The notice of any meeting shall also include, or be
accompanied by, any additional statements, information or documents prescribed
by the General Corporation Law. Except as otherwise provided by the General
Corporation Law, the written notice of any meeting shall be given, personally or
by mail, not less than ten days nor more than sixty days before the date of the
meeting, unless the prescribed period for notice shall have been waived. Notice
by mail shall be deemed to be given when deposited, with postage thereon
prepaid, in the United States mail directed to-the stockholder at his record
address or at such other address which he may have furnished in writing to the
Secretary of the Corporation. If a meeting is adjourned to another time, not
more than
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<PAGE> 4
thirty days from the date of such adjournment, and/or to another place, and if
an announcement of the adjourned time and/or place is made at the meeting, it
shall not be necessary to give notice of the adjourned meeting unless the
directors, after adjournment, fix a new record date for the adjourned meeting.
Notice need not be given to any stockholder who submits a written waiver of
notice signed by him whether before or after the time stated therein. Attendance
of a stockholder at a meeting of stockholders shall constitute a waiver of
notice of such meeting, except when the stockholder attends the meeting for the
express purpose of objecting, at the beginning of the meeting, to the
transaction of any business because the meeting is not lawfully called or
convened. Neither the business to be transacted at, nor the purpose of, any
regular or special meeting of the stockholders need be specified in any written
waiver of notice.
- STOCKHOLDER LIST. The officer who has charge of the stock ledger of
the Corporation shall prepare and make, at least ten days before every meeting
of stockholders, a complete list of the stockholders entitled to vote at the
meeting, arranged in alphabetical order, and showing the address of each
stockholder and the number of shares registered in the name of each stockholder.
Such list shall be open to the examination of any stockholder, for any purpose
germane to the meeting, during ordinary business hours, for a period of at least
ten days prior to the meeting, either at a place within the city or other
municipality or community where the meeting is to be held, which place shall be
specified in the notice of the meeting, or if not so specified, at the place
where the meeting is to be held. The list shall also be produced and kept at the
time and place of the meeting during the whole time thereof, and may be
inspected by any stockholder who is present. The stock ledger shall be the only
evidence as to who are the stockholders entitled to examine the stock ledger,
the list required by this section or the books of the Corporation, or to vote in
person or by proxy at any meeting of stockholders.
- CONDUCT OF MEETING. Meetings of the stockholders shall be presided
over by one of the following officers in the following order of seniority, if
present and acting: the Chairman of the Board, if any, the Vice-Chairman of the
Board, if any, the President, any Vice-President or, if none of the foregoing is
in office and present and acting, by a chairman to be chosen by the
stockholders. The Secretary of the Corporation, or, in his absence, an Assistant
Secretary, if any, shall act as secretary of every meeting, but if neither the
Secretary nor an Assistant Secretary is present, the person presiding at the
meeting shall appoint a secretary of the meeting.
- PROXY REPRESENTATION. Every stockholder may authorize another person
or persons to act for him by proxy in all matters in which a stockholder is
entitled to parti cipate, whether by waiving notice of any meeting, voting or
participating at a meeting, or expressing consent or dissent to corporate action
in writing without a meeting. Every proxy must be signed by the stockholder or
by his attorney-in-fact. No proxy shall be voted or acted upon after three years
from its date unless such proxy provides for a longer period. A duly executed
proxy shall be irrevocable if it states that it is irrevocable and if, and only
as long as, it is coupled with an interest sufficient in law to support an
irrevocable power. A proxy may be made
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<PAGE> 5
irrevocable regardless of whether the interest with which it is coupled is an
interest in the stock itself or an interest in the Corporation generally.
- INSPECTORS. The directors, in advance of any meeting, may, but need
not, appoint one or more inspectors of election to act at the meeting or any
adjournment thereof. If an inspector or inspectors are not appointed, the person
presiding at the meeting may, but need not, appoint one or more inspectors. In
case any person who may be appointed as an inspector fails to appear or act, the
vacancy may be filled by appointment made by the directors in advance of the
meeting or at the meeting by the person presiding thereat. Each inspector, if
any, before entering upon the discharge of his duties, shall take and sign an
oath faithfully to execute the duties of inspector at such meeting with strict
impartiality and according to the best of his ability. The inspectors, if any,
shall determine the number of shares of stock outstanding and the voting power
of each, the shares of stock represented at the meeting, the existence of a
quorum, the validity and effect of proxies, and shall receive votes, ballots or
consents, hear and determine all challenges and questions arising in connection
with the right to vote, count and tabulate all votes, ballots or consents,
determine the result, and do such acts as are proper to conduct the election or
vote with fairness to all stockholders. On request of the person presiding at
the meeting, the inspector or inspectors, if any, shall make a report in writing
of any challenge, question or matter determined by him or them and execute a
certificate of any fact found by him or them.
- QUORUM. Except as otherwise provided by law or the Corporation's
Certificate of Incorporation, the holders of a majority of the outstanding
shares of stock entitled to vote at the meeting, present in person or by proxy,
shall constitute a quorum at a meeting of stockholders for the transaction of
any business. The stockholders present may adjourn the meeting despite the
absence of a quorum.
- VOTING. Unless the Corporation's Certificate of Incorporation
provides otherwise, each share of stock shall entitle the holder thereof to one
vote. In the election of directors, a plurality of the votes present in person
or by proxy and entitled to vote on the election of directors shall elect. Any
other action shall be authorized by the affirmative vote of a majority of the
shares present in person or represented by proxy at the meeting and entitled to
vote on the matter, except where the General Corporation Law, the Certificate of
Incorporation or these ByLaws prescribe a different percentage of votes or a
different exercise of voting power. In the election of directors, and for any
other action, voting need not be by written ballot.
4. STOCKHOLDER ACTION WITHOUT MEETINGS. Any action required by the
General Corporation Law to be taken at any annual or special meeting of
stockholders, or any action which may be taken at any annual or special meeting
of stockholders, may be taken without a meeting, without prior notice and
without a vote, if a consent or consents in writing, setting forth the action so
taken, shall be signed by the holders of outstanding stock having not less than
the minimum number of votes that would be necessary to authorize or take such
action at a meeting at which all shares entitled to vote thereon were present
and voted and shall be delivered to the Corporation by delivery to its register
office in the State of Delaware, its
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<PAGE> 6
principal place of business, or an officer or agent of the Corporation having
custody of the book in which proceedings of meetings of stockholders are
recorded. Delivery made to the Corpora tion's register office shall be by hand
or by certified or registered mail, return receipt requested. Every written
consent shall bear the date of signature of each stockholder who signs the
consent and no consent shall be effective to take the corporate action referred
to therein unless, within sixty days of the earliest date a consent is delivered
to the Corporation in the manner prescribed by the General Corporation Law,
written consents signed by a sufficient number of stockholders to take action
are delivered to the Corporation in the manner specified above. Prompt notice of
the taking of the corporate action without a meeting by less than unanimous
written consent shall be given to those stockholders who have not consented in
writing.
ARTICLE II
DIRECTORS
1. FUNCTIONS AND DEFINITION. The business and affairs of the
Corporation shall be managed by or under the direction of the Board of Directors
of the Corporation. The Board of Directors shall have the authority to fix the
compensation of the members thereof. The use of the phrase "whole board" herein
refers to the total number of directors which the Corporation would have if
there were no vacancies.
2. QUALIFICATIONS AND NUMBER. A director need not be a stockholder, or
a citizen or resident of the United States or the State of Delaware. The Board
of Directors shall initially consist of three persons; PROVIDED, HOWEVER, that
the number of directors constituting the whole Board may be increased or
decreased, from time to time, by action of the stockholders or of the Board.
3. ELECTION AND TERM. The first Board of Directors, unless the members
thereof shall have been named in the Corporation's Certificate of Incorporation,
shall be elected by the incorporator or incorporators and shall hold office
until the first annual meeting of stockholders and thereafter until their
successors are elected and qualified or until their earlier resignation or
removal. Any director may resign at any time upon written notice to the
Corporation. Directors who are elected in the interim to fill vacancies and
newly created directorships, shall hold office until the next annual meeting of
stockholders and until their successors are elected and qualified or until their
earlier resignation or removal. In the interim between annual meetings of
stockholders or of special meetings of stockholders called-for the election of
directors and/or for the removal of one or more directors and for the filling of
any vacancies in that connection, newly created directorships and any vacancies
in the Board of Directors, including unfilled vacancies resulting from the
removal of directors for cause or without cause, may be filled by the vote of a
majority of the directors then in office although less than a quorum, or by the
sole remaining director.
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<PAGE> 7
4. BOARD OF DIRECTORS MEETINGS.
- TIME. Meetings shall be held at such time as the Board shall fix.
- PLACE. Meetings shall be held at such place within or without the
State of Delaware as shall be fixed by the Board.
- CALL. No call shall be required for regular meetings for which the
time and place have been fixed special meetings may be called by or at the
direction of the Chairman of the Board, if any, the Vice-Chairman, if any, or
the President, or any two directors in office.
- NOTICE OR WAIVER OF NOTICE. No notice shall be required for regular
meetings for which the time and place have been fixed. Written, oral, or any
other mode of notice of the time and place shall be given for special meetings
not less than 48 hours in advance of the time set for such meeting. Notice need
not be given --o any director or to any member of a committee of directors who
submits a written waiver of notice signed by him before or after the time for
the meeting stated therein. Attendance of any such person at a meeting shall
constitute a waiver of notice of such meeting, except when he attends a meeting
for the express purpose of objecting, at the beginning of the meeting, to the
transaction of any business because the meeting is not lawfully called or
convened. Neither the business to be transacted at, nor the purpose of, any
regular or special meeting of the directors need be specified in any written
waiver of notice.
- CHAIRMAN OF THE MEETING. The Chairman of the Board, if any and if
present and acting, shall preside at all meetings otherwise, the Vice-Chairman
of the Board, if any and if present and acting, or the President, if present and
acting, or any other director chosen by the Board, shall preside.
- QUORUM. A majority of the whole Board shall constitute a quorum
except when a vacancy or vacancies prevent such majority, whereupon a majority
of the directors in office shall constitute a quorum, provided, that such
majority shall constitute at least one-third of the whole Board, except that if
the Board of Directors shall be fixed at one, one director shall constitute a
quorum. A majority of the directors present, whether or not a quorum is present,
may adjourn a meeting to another time and place.
- ACTION. Except as otherwise provided herein, in the Corporation's
Certificate of Incorporation or by the General Corporation Law, the act of the
Board shall be the act by vote of a majority of the directors present at a
meeting at which a quorum is present. The quorum and voting provisions herein
stated shall not be construed as conflicting with any provision of the General
Corporation Law or any other provision of these By-Laws governing a meeting of
the Board held or action taken (i) to fill vacancies and newly created
directorships in the Board or (ii) to consider a matter with regard to which one
of the members of the Board is an interested director (as defined by the General
Corporation Law).
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<PAGE> 8
5. REMOVAL OF DIRECTORS. Except as may otherwise be provided by the
General Corporation Law, any director or the entire Board of Directors may be
removed, with or without cause, by the holders of a majority of the shares then
entitled to vote at an election of directors.
6. COMMITTEES. The Board of Directors may, by resolution passed by a
majority of the whole Board, designate one or more committees, each committee to
consist of one or more of the directors of the Corporation. In so doing, the
Board may designate one or more directors as alternate members of any committee,
who may replace any absent or disqualified member at any meeting of the
committee. Any subcommittee, to the extent provided in the resolution of the
Board, shall have and may exercise all the powers and authority of the Board of
Directors in the management of the business and affairs of the Corporation,
except any authority the delegation of which is prohibited by Section 141 of the
General Corporation Law, and may authorize the seal of the Corporation to be
affixed to all papers which may require it. In the absence or disqualification
of any member of any such committee or committees, the member or members thereof
present at any meeting and not disqualified from voting, whether or not he or
they constitute a quorum, may unanimously appoint another member of the Board of
Directors to act at the meeting in the place of any such absent or disqualified
member.
7. MEETINGS BY TELEPHONE. Any member or members of the Board of
Directors or of any committee designated by the Board may participate in a
meeting of the Board or any such committee, as the case may be, by means of
conference telephone or similar communications equipment by means of which all
persons participating in the meeting can hear each other and participation by
conference telephone shall constitute presence in person at the meeting.
8. ACTION WITHOUT MEETINGS. Any action required or permitted to be
taken at any meeting of the Board of Directors, or of any committee thereof, may
be taken without a meeting if all members of the Board or committee, as the case
may be, consent thereto in writing, and the writing or writings are filed with
the minutes of proceedings of the Board or committee.
ARTICLE III
OFFICERS
1. ELECTION OF OFFICERS. All officers of the Corporation shall be
chosen by the Board of Directors. The officers of the Corporation shall consist
of the President, the Treasurer and the Secretary and, if deemed necessary,
expedient or desirable by the Board of Directors, a Chairman of the Board, a
Vice-Chairman of the Board, one or more Vice-Presidents, one or more Assistant
Secretaries, one or more Assistant Treasurers, and such other officers, with
such titles, as shall be designated by resolution of the Board of Directors
electing them. Except as may otherwise be provided in the resolution of the
Board of Directors electing him, no officer
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other than the Chairman or Vice-Chairman of the Board, if any, need be a
director. Any number of offices may be held by the same person.
2. TERM OF OFFICE. Unless otherwise provided in the resolution electing
him, each officer shall be chosen for a term which shall continue until the
meeting of the Board of Directors following the next annual meeting of
stockholders and thereafter until his successor shall have been chosen and
qualified or until his earlier resignation or removal. Any officer may be
removed with or without cause by the Board of Directors. Any vacancy in any
office may be filled by the Board of Directors.
3. DUTIES OF OFFICERS. All officers of the Corporation shall have such
powers and authority and shall perform such duties in the management and
operation of the Corporation as follows and, subject thereto, in the resolutions
of the Board of Directors designating and choosing such officers or prescribing
the powers, authority and duties of the various officers of the Corporation and,
subject to the foregoing, such powers and duties as are customarily incident to
their office:
(a) CHAIRMAN OF THE BOARD. The Chairman of the Board of Directors, if
there be one, shall preside at all meetings of the Board of Directors and shall
have such other powers and duties as may from time be assigned by the Board of
Directors.
(b) PRESIDENT AND CHIEF EXECUTIVE OFFICER. The President shall be the
chief executive officer of the Corporation, and shall have such duties as
customarily pertain to that office. The President shall have general management
and supervision of the property, business and affairs of the Corporation and
over its other officers, may appoint and remove assistant officers and other
agents and employees and may execute and deliver in the name of the corporation
powers of attorney, contracts, bonds and other obligations and instruments.
(c) VICE-PRESIDENT. A Vice-President may execute and deliver in the
NAME of the Corporation contracts and other obligations and instruments
pertaining to the regular course of the duties of said office, and shall have
such other authority as from time to time may be assigned by the Board of
Directors or the President.
(d) TREASURER. The Treasurer shall in general have all duties incident
to the position of Treasurer and such other duties as may be assigned by the
Board of Directors or the President.
(e) SECRETARY. The Secretary shall in general have all the duties
incident to the office of Secretary and such other duties as may be assigned by
the Board of Directors or the President.
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(f) ASSISTANT OFFICERS. Any assistant officer shall have such powers
and duties of the officer such assistant officer assists as such officer or the
Board of Directors shall from time to time prescribe.
ARTICLE IV
CERTIFICATES REPRESENTING STOCK
1. CERTIFICATES REPRESENTING STOCK
- SIGNATURES ON CERTIFICATES. The shares of the Corporation shall be
represented by certificates, provided that the Board of Directors of the
Corporation may provide by resolution or resolutions that some or all of any or
all classes or series of its stock shall be uncertificated shares. Any such
resolution shall not apply to shares represented by a certificate until such
certificate is surrendered to the Corporation. Notwithstanding the adoption of
such a resolution by the Board of Directors, every holder of stock represented
by certificates and upon request every holder of uncertificated shares shall be
entitled to have a certificate, signed by or in the name of the Corporation by
the Chairman or Vice-Chairman of the Board of Directors, or the President or
Vice-President, and by the Treasurer or an Assistant Treasurer, or the Secretary
or an Assistant Secretary of the Corporation, representing the number of shares
registered in certificate form. Any or all the signatures on any such
certificate may be facsimiles. In case any officer, transfer agent or registrar
who has signed or whose facsimile signature has been placed upon a certificate
shall have ceased to be such officer, transfer agent or registrar before such
certificate is issued, it may be issued by the Corporation with the same effect
as if he were such officer, transfer agent or registrar at the date of issue.
The name of the holder of record of the shares represented thereby, with the
number of such shares and the date of issue, shall be entered on the books of
the Corporation.
- REQUIRED STATEMENTS. Whenever the Corporation shall be authorized to
issue more than one class of stock or more than one series of any class of stock
and whenever the Corporation shall issue any shares of its stock as partly paid
stock, the certificate representing shares of any such class or series or of-any
such partly paid stock shall set forth thereon the statements prescribed by the
General Corporation Law. Any restrictions on the transfer or registration of
transfer of any shares of stock of any class or series shall be noted
conspicuously on the certificate representing such shares.
- REPLACEMENT OF CERTIFICATES. The Corporation may issue a new
certificate of stock in place of any certificate theretofore issued by it,
alleged to have been lost, stolen, or destroyed, and the corporation may require
the owner of any lost, stolen, or destroyed certificate, or his legal
representative, to indemnify the Corporation against, or give the Corporation a
bond sufficient in the Corporation's reasonable judgment to indemnify the
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Corporation against, any claim that may be made against it on account of the
alleged loss, theft, or destruction of any such certificate or the issuance of
any such new certificate.
2. FRACTIONAL SHARE INTERESTS. The Corporation may, but shall not be
required to, issue fractions of a share. If the Corporation does not issue
fractions of a share, it shall (i) arrange for the disposition of fractional
interests by those entitled thereto, (ii) pay in cash the fair value of
fractions of a share as of the time when those entitled to receive such
fractions are determined, or (iii) issue scrip or warrants in registered or
bearer form (either represented by a certificate or uncertificated) or in bearer
form (represented by a certificate) which shall entitle the holder to receive a
certificate for a full share upon the surrender of such scrip or warrants
aggregating a full share. A certificate for a fractional share shall, but scrip
or warrants shall not unless otherwise provided therein, entitle the holder to
exercise voting rights, to receive dividends thereon, and to participate in any
of the assets of the corporation in the event of liquidation, in each case to
the extent of such fraction. The Board of Directors may cause scrip or warrants
to be issued subject to the conditions that they shall become void if not
exchanged for certificates representing full shares before a specified date, or
subject to the conditions that the shares for which scrip or warrants are
exchangeable may be sold by the Corporation and the proceeds thereof distributed
to the holders of scrip or warrants, or subject to any other conditions which
the Board of Directors may impose.
3. STOCK TRANSFERS. Upon compliance with provisions restricting the
transfer or registration of transfer of shares of stock, if any, transfers or
registration of transfers of shares of stock of the Corporation shall be made
only on the stock ledger of the Corporation by the registered holder thereof, or
by his attorney thereunto authorized by power of attorney duly executed and
filed with the Secretary of the Corporation or with a transfer agent or a
registrar, if any, and on surrender of the certificate or certificates for such
shares of stock properly endorsed or upon the request to transfer uncertificated
shares and the payment of all taxes due thereon.
ARTICLE V
INDEMNIFICATION
1. INDEMNIFICATION RESPECTING THIRD PARTY CLAIMS. The Corporation, to
the full extent permitted, and in the manner required, by the laws of the State
of Delaware as in effect at the time of the adoption of this Article or as such
laws may be amended from time to time, shall indemnify any person who was or is
made a party to or is threatened to be made a party to any threatened, pending
or completed action, suit or proceeding (including any appeal thereof), whether
civil, criminal, administrative or investigative in nature (other than an action
by or in the right of the Corporation), by reason of the fact that such person
is or was a director, officer, employee or agent of the Corporation, or, if at a
time when he was a director, officer, employee or agent of the Corporation, is
or was serving at the request of, or to represent the interests of, the
Corporation as a director, officer, partner, fiduciary, employee or agent (a
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"Subsidiary Officer") of another corporation, partnership, joint venture, trust,
employee benefit plan or other enterprise (an "Affiliated Entity"), against
expenses (including attorneys' fees and disbursements), costs, judgments, fines,
penalties and amounts paid in settlement actually and reasonably incurred by
such person in connection with such action, suit or proceeding if such person
acted in good faith and in a manner such person reasonably believed to be in or
not opposed to the best interests of the Corporation, and, with respect to any
criminal action or proceeding, had no reasonable cause to believe his or her
conduct was unlawful; PROVIDED, HOWEVER, that the Corporation shall not be
obligated to indemnify against any amount paid in settlement unless the
Corporation has consented to such settlement, which consent shall not be
unreasonably withheld. The termination of any action, suit or proceeding by
judgment, order, settlement or conviction or upon a plea of NOLO CONTENDERS or
its equivalent shall not, of itself, create a presumption that the person did
not act in good faith and in a manner which such person reasonably believed to
be in or not opposed to the best interests of the Corporation, and, with respect
to any criminal action or proceeding, that such person had reasonable cause to
believe that his or her conduct was unlawful. Notwithstanding anything to the
contrary in the foregoing provisions of this Section 1, a person shall not be
entitled, as a matter of right, to indemnification pursuant to this Section 1
against costs or expenses incurred in connection with any action, suit or
proceeding commenced by such person against any person who is or was a director,
officer, fiduciary, employee or agent of the Corporation or a Subsidiary Officer
of any Affiliated Entity, but such indemnification may be provided by the
Corporation in a specific case as permitted by Section 6 of this Article V.
2. INDEMNIFICATION RESPECTING DERIVATIVE CLAIMS. The Corporation, to
the full extent permitted, and in the manner required, by the laws of the State
of Delaware as in effect at the time of the adoption of this Article or as such
laws may be amended from time to time, shall indemnify any person who was or is
made a party to or is threatened to be made a party to any threatened, pending
or completed action or suit (including any appeal thereof) brought in the right
of the Corporation to procure a judgment in its favor by reason of the fact that
such person is or was a director, officer, employee or agent of the Corporation,
or, if at a time when he was a director, officer, employee or agent to the
Corporation, is or was serving at the request of, or to represent the interests
of, the Corporation as a Subsidiary Officer of an Affiliated Entity against
expenses (including attorneys' fees and disbursements) and costs actually and
reasonably incurred by such person in connection with such action or suit if
such person acted in good faith and in a manner such person reasonably believed
to be in or not opposed to the best interests of the Corporation, and except
that no indemnification shall be made in respect of any claim, issue or matter
as to which such person shall have been adjudged to be liable to the Corporation
unless, and except to the extent that, the Court of Chancery of the State of
Delaware or the court in which such judgment was rendered shall determine upon
application that, despite the adjudication of liability but in view of all the
circumstances of the case, such person is fairly and reasonably entitled to
indemnity for such expenses and costs as the Court of Chancery of the State of
Delaware or such other court shall deem proper. Notwithstanding anything to the
contrary in the foregoing provisions of this Section 2, a person shall not be
entitled, as a matter of right, to indemnification pursuant to this Section 2
against costs and expenses incurred in
11
<PAGE> 13
connection with any action or suit in the right of the Corporation commenced by
such person, but such indemnification may be provided by the Corporation in any
specific case as permitted by Section 6 of this Article V.
3. DETERMINATION OF ENTITLEMENT TO INDEMNIFICATION. Any indemnification
under Section 1 or 2 of this Article (unless ordered by a court) shall be made
by the Corporation only as authorized in the specific case upon a determination
that indemnification is proper under the circumstances because such person has
met the applicable standard of conduct set forth in Section 1 or 2 of this
Article. Such determination shall be made (i) by the Board of Directors by a
majority vote of a quorum consisting of directors who were not parties to the
action, suit or proceeding in respect of which indemnification is sought or by
majority vote of the members of a committee of the Board of Directors composed
of at least three members each of whom is not a party to such action, suit or
proceeding, or (ii) if such quorum is not obtainable and/or such a committee is
not established or obtainable, or, even if obtainable, if a quorum of
disinterested directors so directs, by independent legal counsel in a written
opinion, or (iii) by the stockholders. In the event a request for
indemnification is made by any person referred to in Section 1 or Section 2 of
this Article, the Corporation shall cause such determination to be made not
later than 60 days after such request is made.
4. RIGHT TO INDEMNIFICATION UPON SUCCESSFUL DEFENSE AND FOR SERVICE AS
WITNESS. (a) Notwithstanding the other provisions of this Article, to the extent
that a director, officer, employee or agent of the Corporation has been
successful on the merits or otherwise in defense of any action, suit or
proceeding referred to in Section 1 or 2 of this Article, or in defense of any
claim, issue or matter therein, such person shall be indemnified against
expenses (including attorneys' fees and disbursements) and costs actually and
reasonably incurred by such person in connection therewith.
(b) To the extent any person who is or was a director, officer,
employment or agent of the Corporation has served or prepared to serve as a
witness in any action, suit or proceeding (whether civil, criminal,
administrative or investigative in nature) or in any investigation by the
Corporation or the Board of Directors thereof or committee thereof or by any
securities exchange on which securities of the Corporation are or were listed by
reason of his services as a director, officer, employee or agent of the
Corporation or as a Subsidiary Officer of any Affiliated Entity (other than in a
suit commenced by such person), the Corporation shall indemnify such person
against expenses (including attorneys' fees and disbursements) and costs
actually and reasonably incurred by such person in connection therewith within
30 days after receipt by the Corporation from such person of a statement
requesting such indemnification, averring such service and reasonably evidencing
such expenses and costs.
5. ADVANCE OF EXPENSES. Expenses and costs incurred by any person
referred to in Section 1 or Section 2 of this Article in defending a civil,
criminal, administrative or investigative action, suit or proceeding shall be
paid by the Corporation in advance of the final
12
<PAGE> 14
disposition of such action, suit or proceeding upon receipt of an undertaking by
or on behalf of such person to repay such amount if it shall ultimately be
determined that such person is not entitled to be indemnified by the Corporation
as authorized by this Article.
6. INDEMNIFICATION NOT EXCLUSIVE. The provision of indemnification to,
or the advancement of expenses and costs to, any person under this Article, or
the entitlement of any person to indemnification or advancement of expenses and
costs under this Article, shall not limit or restrict in any way the power of
the Corporation to indemnify or advance expenses and costs to such person in any
other way permitted by law or be deemed exclusive of, or invalidate, any right
to which any person seeking indemnification or advancement of expenses and costs
may be entitled under any law, agreement, vote of stockholders or disinterested
directors or otherwise, both as to action in such person's capacity as an
officer, director, employee or agent of the Corporation and as to action to any
other capacity while holding any such position.
7. ACCRUAL OF CLAIMS;-SUCCESSORS. The indemnification provided or
permitted under this Article shall apply in respect of any expense, cost,
judgment, fine, penalty or amount paid in settlement, whether or not the claim
or cause of action in respect thereof accrued or arose before or after the
effective date of this Article. The right of any person who is or was a
director, officer, employee or agent of the Corporation to indemnification under
this Article shall continue after he shall have ceased to be a director,
officer, employee or agent and shall inure to the benefit of the heirs,
distributees, executors, administrators and other legal representatives of such
person.
8. CORPORATE OBLIGATIONS; RELIANCE. This Article shall be deemed to
create a binding obligation on the part of the Corporation to its current and
former officers, directors, employees and agents and their heirs, distributees,
executors, administrators and other legal representatives, and such persons in
acting in such capacities shall be entitled to rely on the provisions of this
Article, without giving notice thereof to the Corporation.
9. INSURANCE. The Corporation may purchase and maintain insurance on
behalf of any person who is or was a director, officer, employee or agent of the
Corporation, or is or was serving at the request of, or to represent the
interests of, the Corporation as a Subsidiary Officer of any Affiliated Entity,
against any liability asserted against such person and incurred by such person
in any such capacity, or arising out of such person's status as such, whether or
not the Corporation would have the power to indemnify such person against such
liability under the provisions of this Article or applicable law.
10. DEFINITIONS OF CERTAIN TERMS. (a) For purposes of this Article,
references to "the Corporation" shall include, in addition to the resulting
corporation, any constituent corporation (including any constituent of a
constituent) absorbed in a consolidation or merger which, if its corporate
existence had continued, would have been permitted under applicable law to
indemnify its directors, officers, employees or agents, so that any person who
is
13
<PAGE> 15
or was a director, officer, employee or agent of such constituent corporation,
or is or was serving at the request, or to represent the interests of, such
constituent corporation as a director, officer, employee or agent of any
Affiliated Enterprise shall stand in the same position under the provisions of
this Article with respect to the resulting or surviving corporation as such
person would have with respect to such constituent corporation if its separate
existence had continued.
(b) For purposes of this Article, references to "fines" shall include
any excise taxes assessed on a person with respect to an employee benefit plan;
references to "serving at the request of the Corporation" shall include any
service as a director, officer, fiduciary, employee or agent of the Corporation
which imposes duties on, or involves services by, such director, officer,
fiduciary, employee or agent with respect to an employee benefit plan, its
participants, or beneficiaries; and a person who acted in good faith and in a
manner such person reasonably believed to be in the interest of the participants
and beneficiaries of an employee benefit plan shall be deemed to have acted in a
manner "not opposed to the best interest of the Corporation" as referred to in
this Article.
ARTICLE VI
CORPORATE SEAL
The corporate seal shall be in such form as the Board of Directors
shall prescribe.
ARTICLE VII
FISCAL YEAR
The fiscal year of the Corporation shall be fixed, and shall be subject
to change, by the Board of Directors.
ARTICLE VIII
CONTROL OVER BY-LAWS
The power to amend, alter or repeal the By-Laws and to adopt new
By-Laws may be exercised by the Board of Directors or by action of the
stockholders.
14
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