<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
X Quarterly report pursuant to Section 13 or 15 (d) of the Securities
Exchange Act of 1934
- -----
For the quarterly period ended May 3, 1997
OR
Transition report pursuant to Section 13 or 15 (d) of the Securities
Exchange Act of 1934
- -----
For the transition period from ______ to _______
Commission file number 1-10745
THE CALDOR CORPORATION
(Exact Name of Registrant as Specified in its Charter)
DELAWARE 06-1282044
(State or Other Jurisdiction of (IRS Employer Identification No.)
Incorporation or Organization)
20 GLOVER AVENUE, NORWALK, CT 06856-5620
(Address of Principal Executive Offices) (Zip Code)
(203) 846-1641
(Registrant's Telephone Number, Including Area Code)
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 outstanding as of May 31, 1997 was
16,902,839.
<PAGE> 2
THE CALDOR CORPORATION AND SUBSIDIARIES
Table of Contents
PART I - FINANCIAL INFORMATION
Page
----
ITEM 1 : CONSOLIDATED FINANCIAL STATEMENTS
Independent Accountants' Review Report 3
Consolidated Statements of Operations for the Thirteen
Weeks Ended May 3, 1997 AND May 4, 1996 5
Consolidated Balance Sheets as of May 3, 1997
and February 1, 1997 6
Consolidated Statement of Shareholders' Deficit 7
Consolidated Statements of Cash Flows for the Thirteen
Weeks Ended May 3, 1997 and May 4, 1996 8
Notes to Consolidated Financial Statements 10
ITEM 2 : MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS 15
PART II - OTHER INFORMATION
ITEM 6 : EXHIBITS AND REPORTS ON FORM 8-K 19
2
<PAGE> 3
INDEPENDENT ACCOUNTANTS' REVIEW REPORT
Board of Directors and Stockholders of
The Caldor Corporation
Norwalk, Connecticut
We have reviewed the accompanying consolidated balance sheet of The Caldor
Corporation (Debtor-in-Possession) and subsidiaries (the "Company") as of May 3,
1997 and the related consolidated statements of operations for the thirteen week
periods ended May 3, 1997 and May 4, 1996, stockholders' deficit for the
thirteen week period ended May 3, 1997, and cash flows for the thirteen week
periods ended May 3, 1997 and May 4, 1996. These financial statements are the
responsibility of the Company's management.
We conducted our reviews in accordance with standards established by the
American Institute of Certified Public Accountants. A review of interim
financial information consists principally of applying analytical procedures to
financial data and of making inquiries of persons responsible for financial and
accounting matters. It is substantially less in scope than an audit conducted in
accordance with generally accepted auditing standards, the objective of which is
the expression of an opinion regarding the financial statements taken as a
whole. Accordingly, we do not express such an opinion.
Based on our reviews, we are not aware of any material modifications that should
be made to such consolidated financial statements for them to be in conformity
with generally accepted accounting principles.
As discussed in Notes 1 and 2 to the consolidated financial statements, the
Company and certain of its subsidiaries filed for reorganization under Chapter
11 of the United States Bankruptcy Code in September 1995. The accompanying
consolidated financial statements do not purport to reflect or provide for the
consequences of the bankruptcy proceedings. In particular, such consolidated
financial statements do not purport to show (a) as to assets, their realizable
value on a liquidation basis or their availability to satisfy liabilities; (b)
as to pre-petition liabilities, the amounts that may be allowed for claims or
contingencies, or the status and priority thereof; (c) as to stockholder
accounts, the effect of any changes that may be made in the capitalization of
the Company; (d) as to operations, the effect of any changes that may be made
in its business. The eventual outcome of these matters is not presently
determinable.
3
<PAGE> 4
The accompanying consolidated financial statements have been prepared assuming
that the Company will continue as a going concern. As discussed in Note 1 to the
consolidated financial statements [and Note 1 to the annual financial statements
for the year ended February 1, 1997 (not presented herein)], the bankruptcy
filing and related circumstances and the losses from operations raise
substantial doubt about its ability to continue as a going concern. The
continuation of its business as a going concern is contingent upon, among other
things, future profitable operations, the ability to generate sufficient cash
from operations and financing sources to meet obligations, and the development
and confirmation of a plan of reorganization. Management's plans concerning
these matters are also discussed in the notes to the respective financial
statements. The consolidated financial statements do not include any adjustments
that might result from the outcome of the uncertainties referred to herein and
in the preceding paragraph.
We have previously audited, in accordance with generally accepted auditing
standards, the consolidated balance sheet of The Caldor Corporation
(Debtor-in-Possession) and subsidiaries as of February 1, 1997, and the related
consolidated statements of operations, changes in stockholders' equity
(deficit), and cash flows for the year then ended; and in our report dated April
18, 1997 (May 2, 1997 as to Note 5), we expressed an unqualified opinion on
those consolidated financial statements and included explanatory paragraphs
related to (a) the Company's filing for reorganization under Chapter 11 of the
Federal Bankruptcy Code and (b) the Company's 1996 loss from operations which
raises substantial doubt about the Company's ability to continue as a going
concern. The consolidated statements of operations and cash flows for the year
ended February 1, 1997 are not presented herein. In our opinion, the information
set forth in the accompanying consolidated balance sheet as of February 1, 1997
and related consolidated statement of stockholders' equity/(deficit) for the
year then ended is fairly stated, in all material respects, in relation to the
consolidated financial statements from which it has been derived.
DELOITTE & TOUCHE LLP
New York, New York
June 6, 1997
4
<PAGE> 5
PART I - FINANCIAL INFORMATION
ITEM 1: Consolidated Financial Statements
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 3, 1997 May 4, 1996
----------- -----------
<S> <C> <C>
Net sales $ 525,635 $ 568,560
Cost of merchandise sold 385,197 423,505
Selling, general and administrative expenses 160,088 171,179
Interest expense, net 10,391 8,396
--------- ---------
Loss before reorganization items (30,041) (34,520)
Reorganization items (Note 5) 6,274 8,761
--------- ---------
Net loss $ (36,315) $ (43,281)
========= =========
Net loss per share $ (2.14) $ (2.57)
========= =========
Weighted average common and common
equivalent shares used in computing per
share amounts 16,936 16,857
========= =========
</TABLE>
See notes to consolidated financial statements.
5
<PAGE> 6
THE CALDOR CORPORATION AND SUBSIDIARIES
Consolidated Balance Sheets
(Dollars in thousands, except per share amounts)
<TABLE>
<CAPTION>
May 3, 1997 February 1, 1997
----------- ----------------
<S> <C> <C>
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents $ 35,526 $ 27,477
Restricted cash (Note 3) 7,764 5,254
Accounts receivable 14,099 12,216
Merchandise inventories 507,068 450,499
Assets held for disposal, net -- 8,177
Refundable income taxes 13,402 13,040
Prepaid expenses and other current assets 18,866 17,422
----------- -----------
Total current assets 596,725 534,085
----------- -----------
Property and equipment, net 410,191 420,598
Property under capital leases, net 86,079 87,473
Debt issuance costs 1,515 2,516
Other assets 5,535 5,851
----------- -----------
$ 1,100,045 $ 1,050,523
=========== ===========
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities:
Accounts payable $ 177,869 $ 152,151
Accrued expenses 46,894 62,787
Other accrued liabilities 58,120 64,478
Current maturities of long-term debt 550 550
Borrowings under DIP Facility 235,290 152,000
----------- -----------
Total current liabilities 518,723 431,966
----------- -----------
Long- term debt 18,314 18,463
Other long-term liabilities 29,482 28,322
Liabilities subject to compromise (Note 4) 717,965 719,980
Stockholders' 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,
16,902,839 and 16,939,106 shares,
respectively 169 169
Additional paid-in capital 201,334 201,823
Deficit (385,125) (348,810)
Unearned compensation (817) (1,390)
----------- -----------
Total stockholders' deficit (184,439) (148,208)
----------- -----------
$ 1,100,045 $ 1,050,523
=========== ===========
</TABLE>
See notes to consolidated financial statements.
6
<PAGE> 7
THE CALDOR CORPORATION AND SUBSIDIARIES
Consolidated Statement of Stockholders' Deficit
(Dollars in thousands)
(Unaudited)
<TABLE>
<CAPTION>
Outstanding
Common Stock Additional
------------- Paid-In Unearned Stockholders'
Shares Amount Capital Deficit Compensation Deficit
---------- ------ -------- --------- ------------ -------------
<S> <C> <C> <C> <C> <C> <C>
Balance, February 1, 1997 16,939,106 $169 $201,823 ($348,810) ($1,390) ($148,208)
Cancellation of restricted
stock (36,267) -- (489) -- 312 (177)
Amortization of unearned
compensation -- -- -- -- 261 261
Net loss -- -- -- (36,315) -- (36,315)
---------- ---- -------- --------- ------- ---------
Balance, May 3, 1997 16,902,839 $169 $201,334 ($385,125) ($817) ($184,439)
========== ==== ======== ========= ======= =========
</TABLE>
See notes to consolidated financial statements.
7
<PAGE> 8
THE CALDOR CORPORATION AND SUBSIDIARIES
Consolidated Statements of Cash Flows
(Dollars in thousands)
(Unaudited)
<TABLE>
<CAPTION>
FOR THE 13 WEEKS ENDED:
-----------------------
MAY 3, 1997 MAY 4, 1996
----------- -----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $(36,315) $ (43,281)
Adjustments to reconcile net loss to cash used
in operating activities:
Amortization of debt issuance costs 790 400
Depreciation and other amortization 13,838 11,992
Amortization of unearned compensation 261 171
Reorganization items 6,274 8,761
Working capital and other (46,277) (46,098)
-------- ---------
Net cash used in operating activities
before reorganization items (61,429) (68,055)
Reorganization items
Reduction in liabilities subject to compromise (2,015) (12,291)
Reorganization items paid (6,696) (12,052)
-------- ---------
Net cash used in operating activities (70,140) (92,398)
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (2,442) (6,462)
-------- ---------
Net cash used in investing activities (2,442) (6,462)
-------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Repayment of construction loan previously subject to compromise -- (5,753)
Proceeds from borrowings under construction loans -- 9,274
Proceeds from borrowings under DIP Facility 83,290 112,500
Increase in restricted cash (2,510) --
Repayment of long-term debt (149) --
-------- ---------
Net cash provided by financing activities 80,631 116,021
-------- ---------
Increase in cash and cash equivalents 8,049 17,161
Cash and cash equivalents, beginning of period 27,477 25,577
-------- ---------
Cash and cash equivalents, end of period $ 35,526 $ 42,738
======== =========
</TABLE>
See notes to consolidated financial statements.
8
<PAGE> 9
THE CALDOR CORPORATION AND SUBSIDIARIES
Consolidated Statements of Cash Flows
(Dollars in thousands)
(Unaudited)
<TABLE>
<CAPTION>
For the 13 Weeks Ended:
-------------------------
May 3, 1997 May 4, 1996
----------- -----------
<S> <C> <C>
WORKING CAPITAL AND OTHER COMPRISED OF:
Accounts receivable $ (1,883) $ (2,586)
Merchandise inventories (56,569) (89,665)
Prepaid expenses and other current assets (1,444) (932)
Assets held for disposal, net 8,177 4,658
Refundable income taxes and deferred income taxes (362) 2,236
Accounts payable 25,718 40,881
Accrued expenses (15,893) (6,162)
Other accrued liabilities (2,513) 4,850
Other assets and long-term liabilities (1,508) 622
-------- --------
$(46,277) $(46,098)
======== ========
</TABLE>
See notes to consolidated financial statements.
9
<PAGE> 10
THE CALDOR CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(in thousands)
1. BASIS OF PRESENTATION
The 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").
The Company's consolidated financial statements have been prepared in
accordance with generally accepted accounting principles applicable to
a going concern, which contemplates continuity of operations,
realization of assets and liquidation of liabilities and commitments in
the normal course of business. The Filing, related circumstances and
the losses from operations, raise substantial doubt about its ability
to continue as a going concern. The appropriateness of using the going
concern basis is dependent upon, among other things, confirmation of a
plan of reorganization, future profitable operations, and the ability
to generate sufficient cash from operations and financing sources to
meet obligations. As a result of the Filing and related circumstances,
however, such realization of assets and liquidation of liabilities is
subject to significant uncertainty. While under the protection of
Chapter 11, the Debtors may sell or otherwise dispose of assets, and
liquidate or settle liabilities, for amounts other than those reflected
in the consolidated financial statements. Further, a plan of
reorganization could materially change the amounts reported in the
consolidated financial statements. The consolidated financial
statements do not include any adjustments relating to a recoverability
of the value of recorded asset amounts or the amounts and
classification of liabilities that might be necessary as a consequence
of a plan of reorganization.
With respect to the unaudited consolidated financial statements for the
thirteen weeks ended May 3, 1997 ("First Quarter 1997"), 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 periods presented. Although these
consolidated financial statements are unaudited, they have been
reviewed by the Company's independent accountants, Deloitte & Touche
LLP, for conformity with accounting requirements for interim financial
reporting. Their report on such review is included herein.
These consolidated statements should be read in conjunction with the
Company's consolidated financial statements included in the
Registrant's Annual Report on Form 10-K for the fiscal year ended
February 1, 1997. Due to the seasonal nature of the Company's sales
and the
10
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Filing, operating results for the interim period are not necessarily
indicative of results that may be expected for the fiscal year ending
January 31, 1998. 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 prior periods' 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. The Bankruptcy Court fixed August 12, 1996
as the last date by which creditors of the Debtors could file proofs of
claim for claims that arose prior to the Filing. The Debtors are in the
process of reconciling differences between amounts shown by the Debtors
and claims filed by creditors. 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. The Bankruptcy Court has extended the period in which the
Debtors possess the exclusive right to file a plan of reorganization
through September 1, 1997 and the period in which the Debtors can
solicit acceptances for the plan of reorganization through October 30,
1997. At this point, it is uncertain what, if anything, a plan of
reorganization may provide for equity security holders.
On March 12, 1997 the Bankruptcy Court approved the closing of 4
under-performing stores and the Debtor's retention of a liquidator to
conduct store closing sales (the "4 Store Closing Sales"). These sales
were completed and the stores were closed by the end of May 1997.
Concurrently, the Registrant, as the borrower thereunder, the
subsidiaries of the Registrant named therein, as the guarantors
thereunder, and the bank group led by the Chase Manhattan Bank
("Chase") entered into an amendment (the "Third Amendment") to the
Amended and 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 Chase ("the DIP Facility"). This
amendment provided that all of the proceeds of the 4 Store Closing
Sales are to be applied to a prepayment of the Tranche B loans and the
Tranche B facility commitment be reduced by such amount.
On June 4, 1997, the Bankruptcy Court approved the extension of the DIP
Facility to June 15, 1998 (the "Extended DIP Facility"). The Extended
DIP Facility provides for a revolving credit and letter of credit
facility in an aggregate principal amount not to exceed $450 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 $250 million made available by the
Tranche A Banks (the "Tranche A Facility") and (ii) the continued use
of the revolving credit and letter of credit portion of the
pre-petition credit facility made available by the Tranche B Banks (the
"Tranche B Facility") in an aggregate principal amount of $200 million
which principal amount may be borrowed, paid and reborrowed. In
addition, the Extended DIP Facility provides for, among other things, a
mandatory paydown of the aggregate principal amount of the
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outstanding loans (exclusive of letters of credit) to $165
million for a period of 15 consecutive business days during the
period from December 15, 1997 through January 15, 1998, capital
expenditures not to exceed $30 million through the fiscal year ending
January 31, 1998 ("Fiscal Year 1997") and $16 million (subject to a $3
million increase if certain EBITDA projections are achieved)
thereafter through the maturity date, revised EBITDA thresholds for
the trailing four quarters for each of the fiscal quarters in Fiscal
Year 1997 and for the fiscal quarter ending April 30, 1998 and revised
monthly inventory amounts through June 15, 1998. The Extended DIP
Facility provides that advances made (i) under the Tranche A Facility
will bear interest at a rate of 0.75% per annum in excess of ABR, or
at the Registrant's option, a rate of 1.75% per annum in excess of
LIBOR for the interest periods of one, three or six months or (ii)
under the Tranche B Facility will bear interest at 0.25% per annum in
excess of ABR, or, at the Registrant's option, a rate of 1.0% per
annum in excess of LIBOR. The Registrant incurred approximately $3
million in bank fees associated with the extension of the DIP
Facility, which fees were paid subsequent to the First Quarter 1997.
In all other material respects the DIP Facility remains unchanged. For
further information, see "Management's Discussion and Analysis of
Financial Condition and Results of Operations--Financial Condition."
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 of May 3, 1997, the Debtors had
rejected the leases for 26 locations and moved to reject four others,
assumed 15 real estate leases (seven of which were for stores opened
prior to 1996, two warehouses and the balance were for stores that were
opened in 1996) conditionally assumed two real estate leases and had
reached agreement with landlords to terminate an additional seven
leases without liability. 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 1, 1997.
3. RESTRICTED CASH
As of May 3, 1997, the restricted cash balance included $2.5
million of proceeds from the 4 Store Closing Sales held in escrow
pursuant to the Third Amendment to the DIP Facility, which amount, net
of the Company's expenses, was subsequently applied to payment of the
Tranche B loans. In addition, $5.3 million is being held in an escrow
account pending final resolution of issues concerning the closing
sales agreement between the Company and the liquidator of the stores
closed in 1996. Any balance remaining after such resolution will be
applied, net of the Company's expenses, to payment of the Term Loan
(as defined in the DIP Facility).
12
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4. LIABILITIES SUBJECT TO COMPROMISE
Liabilities subject to compromise are subject to future adjustments
depending on Bankruptcy Court actions and further developments with
respect to disputed claims. Liabilities subject to compromise were as
follows:
<TABLE>
<CAPTION>
May 3, 1997 February 1, 1997
----------- ----------------
<S> <C> <C>
Accounts payable $226,771 $226,506
Term Loan 190,900 191,100
Real Estate Loan 37,145 37,145
Rejected leases and other
miscellaneous claims 129,900 129,900
Accrued expenses 79,867 80,784
Capital lease obligations 38,155 39,318
Construction loan 11,511 11,511
Industrial revenue bonds
and mortgage notes 3,716 3,716
-------- --------
Total $717,965 $719,980
</TABLE>
Liabilities subject to compromise under reorganization proceedings
include substantially all current and long-term unsecured debt as of
the date of the Filing. Pursuant to the provisions of the Bankruptcy
Code, payment of those liabilities may not be made except pursuant to a
plan of reorganization or Bankruptcy Court order while the Debtors
continue to operate as debtors-in-possession. The liability for
rejected leases and other miscellaneous claims includes the Company's
estimate of its liability for certain leases that have either been
rejected or the Company anticipates rejecting.
5. REORGANIZATION ITEMS
Reorganization items that were directly associated with the Company's
Chapter 11 reorganization proceedings and the resulting restructuring
of its operations consisted of the following for the 13 weeks ended May
3, 1997 and May 4, 1996:
<TABLE>
<CAPTION>
May 3, 1997 May 4, 1996
----------- -----------
<S> <C> <C>
Retention costs $2,630 $2,630
Professional fees 2,551 4,569
Other 1,093 1,562
------ ------
Total provision for reorganization $6,274 $8,761
</TABLE>
6. INCOME TAXES
Income taxes are provided based on the asset and liability method of
accounting pursuant to Statement of Financial Accounting Standards
("SFAS") No. 109, "Accounting for Income Taxes". The Company has
generated substantial net operating loss carryforwards as a result of
the net losses incurred in 1995 and 1996. 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 fiscal 1997 losses.
13
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7. RECENT ACCOUNTING PRONOUNCEMENT
In February 1997, the Financial Accounting Standards Board
issued SFAS No. 128, "Earnings per share", which is effective for the
Company beginning with the fourth quarter of Fiscal Year 1997. SFAS
No. 128 establishes standards for computing and presenting earnings
per share. The Company has determined that the adoption of SFAS No.
128 will not have a significant impact on the Company's earnings
(loss) per share.
14
<PAGE> 15
ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
OVERVIEW
The Debtors filed petitions for relief under Chapter 11 on September 18, 1995
and are presently operating their business as debtors-in-possession subject to
the jurisdiction of the Bankruptcy Court. As a result of the Filing, the cash
requirements for the payments 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
Results of operations expressed as a percentage of net sales were as follows for
the 13 weeks ended May 3, 1997 and the 13 weeks ended May 4, 1996 ("First
Quarter 1996"):
<TABLE>
<CAPTION>
May 3, 1997 May 4, 1996
--------------------------- -----------------------------
(dollars in thousands) $ % $ %
- -------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net sales 525,635 100.0 568,560 100.0
Cost of merchandise sold 385,197 73.3 423,505 74.5
Gross margin 140,438 26.7 145,055 25.5
Selling, general and
administrative expenses 160,088 30.5 171,179 30.1
Interest expense, net 10,391 2.0 8,396 1.5
Loss before reorganization items (30,041) (5.7) (34,520) (6.1)
Net loss (36,315) (6.9) (43,281) (7.6)
</TABLE>
Total sales for First Quarter 1997 were $525.6 million compared to $568.6
million for First Quarter 1996, a decrease of $43 million, or 7.6%. This
decrease was primarily due to a 6.6% decrease in comparable store sales and 12
stores that were closed since First Quarter 1996, partially offset by the sales
from seven new stores opened since mid-April 1996. The decrease in comparable
store sales was primarily attributable to changes in the Company's marketing
strategy, including the discontinuance of one-day sale events, mid-week
circulars and coupon sales, unseasonably cold weather in the Northeast that
impacted the Company's seasonal merchandise categories and the intensely
competitive retail environment. The Company made the determination that the
discontinued marketing programs were neither profitable nor compatible with its
long-term marketing strategy.
Gross margin as a percentage of sales for First Quarter 1997 increased by 1.2%
to 26.7% from 25.5% in First Quarter 1996. The increase was primarily due to
reduced promotional markdowns as compared to last year due to the changes in the
Company's marketing strategy. This increase was partially offset by an increase
in the reserve for inventory shrinkage.
In the third quarter of 1996, to better balance its promotional and
regular-priced business and to provide fair prices everyday, the Company
introduced its Price Cut Program, which lowered
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<PAGE> 16
everyday prices on selected items in electronics, health and beauty aids,
diapers, household chemicals, furniture, hardware and housewares. In May 1997,
the Company extended the Price Cut Program to certain other product categories
such as basic apparel commodities and paper products. The Company is currently
evaluating extending the Price Cut Program to other product categories. The
Company believes that the impact of the Price Cut Program will be partially
offset by reduced promotional and permanent markdowns and by increased sales of
regular-priced merchandise.
Selling, general and administrative expenses ("SG&A") decreased $11.1 million
for the First Quarter of 1997 compared to First Quarter 1996. Initiatives to
reduce SG&A adopted by the Company in the second quarter of 1996 included;
changes in marketing strategy which have reduced advertising expenses, reduction
of corporate overhead and the discontinuance of additional accruals related to
the pension plan. However, the decrease in sales levels resulted in an increase
in SG&A as a percentage of sales of 0.4% to 30.5% in First Quarter 1997
compared to 30.1% in First Quarter 1996.
Interest expense, net, for First Quarter 1997 increased by $2 million primarily
due to an increase in average revolving credit borrowings as compared to First
Quarter 1996. Average revolving credit borrowings were $194.9 million at a
weighted average interest rate of 6.6% in First Quarter 1997 compared to $110.2
million at 6.6% for First Quarter 1996. The weighted average interest rate of
the Term Loan was 6.4% in First Quarter 1997 compared to 6.3% in First Quarter
1996. As a percentage of sales, interest expense, net, for First Quarter 1997
was 2.0% compared to 1.5% in First Quarter 1996.
The Company did not record a tax benefit in First Quarter 1997 since the
utilization of the Company's loss carryforwards is dependent upon sufficient
future taxable income and the Company has established a full valuation allowance
against these carryforward benefits.
Reorganization costs relating to the Chapter 11 proceedings, consisting
primarily of retention costs and professional fees, were $6.3 million in First
Quarter 1997 compared to $8.8 million in First Quarter 1996.
FINANCIAL CONDITION
The Company's working capital as of May 3, 1997 decreased by $24.1 million from
February 1, 1997. Inventories increased by $56.6 million and accounts payable
increased by $25.7 million principally due to seasonal increases. The Company
incurred a net loss of $36.3 million for First Quarter 1997, compared to a net
loss of $43.3 million in the same period last year. These factors, along with
capital expenditures of $2.4 million, contributed to the increase in borrowings
under the DIP Facility of $83.3 million.
Net cash used in operating activities for First Quarter 1997 was $70.1 million
as compared to $92.4 million for First Quarter 1996. This use of cash for
operating activities was primarily due to the decrease in working capital, the
Company's net loss of $36.3 million and reorganization item payments of $6.7
million.
For First Quarter 1997, $2.4 million was spent for capital expenditures
compared to $6.5 million for First Quarter 1996. The Company's capital
expenditures for Fiscal Year 1997 are projected to be approximately $30 million
to be used primarily for store remodeling, management information systems and
distribution center and store upgrades and improvements.
On October 17, 1995, the Bankruptcy Court entered a final order approving the
DIP Facility. The DIP Facility amended and restated, in its entirety, the
Registrant's Debtor-In-Possession Revolving Credit and Guaranty Agreement dated
as of September 18, 1995 with Chase as agent. Pursuant to the terms of the DIP
Facility, the bank group made available to the Registrant a
16
<PAGE> 17
revolving credit and letter of credit facility in an aggregate principal
amount, at May 3, 1997, not to exceed a total of $436.7 million, consisting of
(i) up to $200 million (reflecting the $50 million line reduction on May 3, 1997
provided for in the second amendment to the DIP Facility) under the Tranche A
Facility and (ii) $236.7 million under the Tranche B Facility. The Registrant's
maximum borrowing under the Tranche A Facility, up to $200 million, could not
exceed the lesser of 60% of Eligible Cost Value of Inventory or 50% of Eligible
Retail Value of Inventory. On June 4, 1997, the Bankruptcy Court entered
a final order approving the extension of the DIP Facility to June 15, 1998.
Pursuant to the terms of the Extended DIP Facility, the bank group has made
available to the Registrant an aggregate principal amount of up to $450 million
consisting of (i) up to $250 million under the Tranche A Facility and (ii) $200
million under the Tranche B Facility. The Company's maximum borrowing under the
Tranche A Facility, up to $250 million, may not exceed the lesser of 60% of
Eligible Cost Value of Inventory or 50% of Eligible Retail Value of Inventory.
The Extended DIP Facility has a sublimit of $175 million for the issuance of
letters of credit. The Tranche B Facility must be fully utilized before the
Company can borrow under the Tranche A Facility.
Borrowings under the Extended DIP Facility may be used to fund working capital
and inventory purchases and for other general corporate purposes. The Extended
DIP Facility provides for, among other things, a mandatory paydown of the
aggregate principal amount of the outstanding loans (exclusive of letters of
credit) to $165 million for a period of 15 consecutive business days during the
period from December 15, 1997 through January 15, 1998, capital expenditures
not to exceed $30 million through Fiscal Year 1997 and $16 million (subject to
a $3 million increase if certain EBITDA projections are achieved) thereafter
through the maturity date and revised EBITDA thresholds for the trailing four
quarters for each of the fiscal quarters in Fiscal Year 1997 and for the fiscal
quarter ending April 30, 1998. The Extended DIP Facility also contains
restrictive covenants, including, among other things, limitations on the
creation of additional liens and indebtedness, capital leases and annual rents,
the sale of assets, and the maintenance of minimum earnings before interest,
taxes, depreciation, amortization and reorganization items, the maintenance of
inventory levels, and a prohibition on the payment of dividends.
The Extended DIP Facility provides that advances made (i) under the Tranche A
Facility will bear interest at a rate of 0.75% per annum in excess of ABR, or at
the Registrant's option, a rate of 1.75% per annum in excess of LIBOR for the
interest periods of one, three or six months or (ii) under the Tranche B
Facility will bear interest at 0.25% per annum in excess of ABR, or, at the
Registrant's option, a rate of 1.0% per annum in excess of LIBOR.
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, Chase, 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. The
pre-petition banks have been granted a security interest in all assets of the
Debtors, subordinate to the security interests and liens thereon granted to the
Tranche A Banks and the Tranche B Banks, subject to the conditions of the
financing order of the Bankruptcy Court, dated October 17, 1995.
As of May 3, 1997, the outstanding borrowings under the DIP Facility were $235.3
million and open letters of credit were $44.9 million.
The Company believes that cash on hand, amounts available under the Extended DIP
Facility and funds from operations will enable the Company to meet its current
liquidity and capital expenditure requirements for the next twelve months. Until
a plan of reorganization is
17
<PAGE> 18
approved, the Company's long-term liquidity and the adequacy of its capital
resources cannot be determined.
FORWARD - LOOKING STATEMENTS
From time to time, information provided by the Company, statements made by its
employees or information included in its filings with the Securities and
Exchange Commission (the "SEC") (including the Quarterly Report on Form 10-Q)
may contain statements which are not historical facts, so-called
"forward-looking statements" within the meaning of the Private Securities
Litigation Reform Act of 1995. Such forward-looking statements involve known
and unknown risks, uncertainties and other factors that may cause the actual
results, performance or achievements of the Company to be materially different
from any future results, performance or achievements expressed or implied by
the forward-looking staements. 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 substantial portion 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 Extended DIP Facility. The Extended DIP Facility contains restrictive
covenants, including, among other things, limitations on the creation of
additional liens and indebtedness, limitations on capital expenditures, capital
leases and annual rents, the sale of assets and the maintenance of minimum
earnings before interest, taxes, depreciation, amortization and reorganization
items, the maintenance of inventory levels, and a prohibition on the payment of
dividends. 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."
18
<PAGE> 19
PART II: OTHER INFORMATION
ITEM 6: EXHIBITS AND REPORTS ON FORM 8-K
a) Exhibits
--------
<TABLE>
<CAPTION>
Exhibit Number Description
-------------- -----------
<S> <C>
10.1 Fourth Amendment, dated as of April 30, 1997, among
the Registrant, as borrower, certain of its subsidiaries
as guarantors, the banks party thereto and The Chase
Manhattan Bank, as agent for the banks.
15 Letter in lieu of consent of Deloitte & Touche LLP
re unaudited interim financial information.
27 Financial Data Schedule.
</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 February 26, 1997 reporting on Item 5. No
financial statements were included in such filing.
19
<PAGE> 20
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 11, 1997 By: /s/ Warren D. Feldberg
---------------------- -------------------------------------------
Warren D. Feldberg
Chairman, Chief Executive Officer and
Director
Date: June 11, 1997 By: /s/ John G. Reen
---------------------- -------------------------------------------
John G. Reen
Executive Vice President,
Chief Financial Officer and Director
20
<PAGE> 21
EXHIBIT INDEX
-------------
Exhibit Number Description
- ------------- -----------
10.1 Fourth Amendment, dated as of April 30, 1997, among
the Registrant, as borrower, certain of its subsidiaries
as guarantors, the banks party thereto and The Chase
Manhattan Bank, as agent for the banks.
15 Letter in lieu of consent of Deloitte & Touche LLP
re unaudited interim financial information.
27 Financial Data Schedule.
<PAGE> 1
FOURTH AMENDMENT TO AMENDED AND
RESTATED REVOLVING CREDIT
AND GUARANTY AGREEMENT
FOURTH AMENDMENT, dated as of April 30, 1997 (the
"Amendment"), to the AMENDED AND RESTATED REVOLVING CREDIT AND GUARANTY
AGREEMENT, dated as of October 17, 1995, among THE CALDOR CORPORATION, a
Delaware corporation (the "Borrower"), a debtor and debtor-in-possession under
Chapter 11 of the Bankruptcy Code, the Guarantors named therein (the
"Guarantors"), each a debtor and debtor-in-possession under Chapter 11 of the
Bankruptcy Code, THE CHASE MANHATTAN BANK (formerly known as Chemical Bank), a
New York banking corporation ("Chase"), each of the other financial institutions
party thereto (together with Chase, the "Banks") and THE CHASE MANHATTAN BANK,
as Agent for the Banks (in such capacity, the "Agent"):
W I T N E S S E T H:
WHEREAS, the Borrower, the Guarantors, the Banks and the Agent
are parties to that certain Amended and Restated Revolving Credit and Guaranty
Agreement, dated as of October 17, 1995 (as heretofore amended pursuant to the
Amendment Letter Agreement dated April 24, 1996, the Second Amendment to Amended
and Restated Revolving Credit and Guaranty Agreement dated as of June 28, 1996
and the Revised Four Store Amendment Letter Agreement dated March 12, 1997, and
as the same may be amended, modified or supplemented from time to time, the
"Credit Agreement"); and
WHEREAS, the Borrower and the Guarantors have requested that
from and after the Effective Date (as hereinafter defined) of this Amendment,
the Credit Agreement be amended subject to and upon the terms and conditions set
forth herein.
NOW, THEREFORE, the parties hereto hereby agree as follows:
1. As used herein, all terms that are defined in the Credit
Agreement shall have the same meanings herein.
2. Section 1.01 of the Credit Agreement is hereby amended by
inserting the following new definitions in appropriate alphabetical order:
"Amendment Effective Date" shall have the meaning
given such term in paragraph 23 of the Fourth Amendment.
"Fourth Amendment" shall mean the Fourth Amendment,
dated as of April 30, 1997, to this Agreement.
<PAGE> 2
"Extension Order" shall have the meaning given such
term in Section 4.04(b).
3. The definition of the term "Maturity Date" set forth in
Section 1.01 of the Credit Agreement is hereby amended in its entirety to read
as follows:
"Maturity Date" shall mean June 15, 1998.
4. The definition of the term "Orders" set forth in Section
1.01 of the Credit Agreement is hereby amended in its entirety to read as
follows:
"Orders" shall mean the Interim Order, the Final
Order and the Extension Order referred to in Sections 4.01(c),
4.02(d) and 4.04(b), respectively.
5. Section 2.01(b) of the Credit Agreement is hereby amended
by deleting the amount "$254,000,000" set forth in the second sentence thereof
and inserting in lieu thereof the amount "$200,000,000".
6. Section 2.03(d) of the Credit Agreement is hereby amended
by deleting clauses (i) and (ii) set forth in the first sentence thereof in
their entirety and inserting in lieu thereof the following:
"(i) in the case of Tranche A Letters of Credit, the
Alternate Base Rate plus 1/2% (and from and after the
Amendment Effective Date, at a rate per annum equal to the
Alternate Base Rate plus 3/4%) and thereafter until reimbursed
in full at a rate per annum equal to the Alternate Base Rate
plus 2-1/2% (and from and after the Amendment Effective Date,
at a rate per annum equal to the Alternate Base Rate plus
2-3/4%) and (ii) in the case of Tranche B Letters of Credit,
the Alternate Base Rate (and from and after the Amendment
Effective Date, at a rate per annum equal to the Alternate
Base Rate plus 1/4%) and thereafter until reimbursed in full
at a rate per annum equal to the Alternate Base Rate plus 2%
(and from and after the Amendment Effective Date, at a rate
per annum equal to the Alternate Base Rate plus 2-1/4%) (in
each case computed on the basis of the actual number of days
elapsed over any year of 360 days)."
2
<PAGE> 3
7. Section 2.03 of the Credit Agreement is hereby further
amended by inserting the following new clause (k) at the end thereof:
"(k) The issuance by the Agent of air bill guarantees
for the account of the Borrower in an aggregate amount not to
exceed $1,000,000 at any one time outstanding shall be treated
for all purposes under this Agreement as the issuance of
Letters of Credit pursuant to Section 2.03 and as usage of the
Total Commitment to the extent thereof. The Borrower's
undertaking to reimburse and indemnify the Agent in respect of
such air bill guarantees shall be included within the
Obligations, shall be subject to the provisions hereof
(including, without limitation, Sections 2.05, 2.21, 2.23,
7.01, 9.01, 9.02 and 9.03) and otherwise shall be entitled to
the benefits of the Orders and the other Loan Documents."
8. Section 2.08(a) of the Credit Agreement is hereby amended
by inserting the following proviso at the end thereof:
"PROVIDED, that from and after the Amendment Effective Date,
such rates per annum shall be equal to the Alternate Base Rate
plus 3/4% in the case of the Tranche A Loans and the Alternate
Base Rate plus 1/4% in the case of the Tranche B Loans,
respectively."
9. Section 2.08(b) of the Credit Agreement is hereby amended
by inserting the following proviso at the end thereof:
"PROVIDED, that from and after the Amendment Effective Date,
such rates per annum shall be equal to the Adjusted LIBOR Rate
for such Interest Period in effect for such Borrowing plus
1-3/4% in the case of the Tranche A Loans and 1% in the case
of the Tranche B Loans, respectively."
10. Section 2.09 of the Credit Agreement is hereby amended by
inserting the following proviso at the end thereof:
"PROVIDED, that from and after the Amendment Effective Date,
such rates per annum shall be equal to the Alternate Base Rate
plus 2-3/4% in the case of the Tranche A Loans and
3
<PAGE> 4
the Alternate Base Rate plus 2-1/4% in the case of the Tranche
B Loans, respectively."
11. Section 2.10 of the Credit Agreement is hereby amended by
deleting clause (e) thereof in its entirety and inserting in lieu thereof the
following:
"(e) Intentionally Omitted"
12. Section 2.13 is hereby amended by deleting the word "and"
set forth at the end of clause (c) thereof, by deleting the period at the end of
clause (d) and inserting in lieu thereof a semicolon and the word "and", and by
inserting a new clause "(e)" to read as follows:
"(e) during the period commencing on December 15,
1997 and ending on January 15, 1998, the Borrower shall prepay
the Loans in an amount such that the aggregate principal
amount of all Loans outstanding (exclusive of Letters of
Credit) shall not be in excess of $165,000,000 for a period of
fifteen (15) consecutive Business Days during such period."
13. Section 2.19 of the Credit Agreement is hereby amended in
its entirety to read as follows:
SECTION 2.19. CERTAIN FEES. The Borrower shall pay
(i) to the Agent, for the respective accounts of the Agent and
the Banks, the fees set forth in that certain letter dated
September 17, 1995 among the Agent, Chemical Securities, Inc.
(now known as Chase Securities Inc.) and the Borrower, (ii) to
the Agent, for the respective accounts of (x) the Tranche A
Banks, on the Amendment Effective Date, a facility fee in an
aggregate amount equal to one-half of one percent (1/2%) of
the Total Tranche A Commitment and (y) the Tranche B Banks, on
the Amendment Effective Date, a facility fee in an aggregate
amount equal to three-eighths of one percent (3/8%) of the
Total Tranche B Commitment and (iii) to the Agent, for its own
account, the fees set forth in that certain letter dated April
30, 1997, among the Agent, Chase Securities Inc. and the
Borrower.
4
<PAGE> 5
14. Section 2.21 of the Credit Agreement is hereby amended by
inserting the parenthetical phrase "(and from and after the Amendment Effective
Date, one and three-quarters percent (1-3/4%) per annum)" immediately following
the words "one and one-half percent (1-1/2%) per annum" set forth in subclause
(i)(x) and is hereby further amended by inserting the parenthetical phrase "(and
from and after the Amendment Effective Date, one percent (1%) per annum)"
immediately following the words "three-quarters of one percent (3/4%) per annum"
set forth in subclause (i)(y) thereof.
15. Article IV of the Credit Agreement is hereby amended by
inserting the following new Section 4.04 at the end thereof:
SECTION 4.04. CONDITIONS PRECEDENT TO EXTENSION OF THE
MATURITY DATE. The effectiveness of the extension of the Maturity Date
pursuant to, and of the other modifications to this Agreement
contemplated by, the Fourth Amendment is subject to the satisfaction of
the following conditions precedent:
(a) Notes. On or before the Amendment Effective Date, the
Agent shall have received Notes in substantially the form of Exhibit
A-1 and A-2 to the Fourth Amendment executed on behalf of the Borrower,
dated the Amendment Effective Date, payable to the order of each of the
Banks, in an amount equal to such Bank's Tranche A Commitment and
Tranche B Commitment, respectively.
(b) Order. On or before the Amendment Effective Date, the
Agent and the Banks shall have received a certified copy of an order of
the Bankruptcy Court in form and substance satisfactory to the Agent
(the "Extension Order") approving the terms of the Fourth Amendment
(including the payment of the Fees required thereunder) which Extension
Order shall be in full force and effect, and shall not have been
stayed, reversed, modified or amended in any respect.
(c) Opinion of Counsel to the Borrower. The Agent and the
Banks shall have received the favorable opinion of counsel to the
Borrower and the Guarantors reasonably acceptable to the Agent, dated
the Amendment Effective Date, in form and substance satisfactory to the
Agent.
5
<PAGE> 6
(d) Payment of Fees. The Borrower shall have paid to the
Agent the then unpaid balance of all accrued and unpaid Fees owed under
and pursuant to this Agreement and the letters referred to in Section
2.19.
(e) Prepayment of Tranche B Loans. The Borrower shall
have effected a prepayment of Tranche B Loans in an amount such that,
after giving effect to such prepayment, the sum of (x) the outstanding
aggregate principal amount of the Tranche B Loans PLUS (y) the then
aggregate Tranche B Letter of Credit Outstandings shall equal the
amount of the Total Tranche B Commitment (it being understood that such
prepayment shall be made with the Section 6.12(iv) Proceeds then held
in the segregated account referred to in Section 6.12(iv)(z) that
remain to be applied to the Tranche B Loans and the Total Tranche B
Commitment in accordance with the provisions of Section 6.12(iv) and
with the proceeds of Tranche A Loans).
(f) Corporate and Judicial Proceedings. All corporate and
judicial proceedings and all instruments and agreements in connection
with the transactions among the Borrower, the Guarantors, the Agent and
the Banks contemplated by the Fourth Amendment shall be reasonably
satisfactory in form and substance to the Agent, and the Agent shall
have received all information and copies of all documents and papers,
including records of corporate and judicial proceedings, which the
Agent may have reasonably requested in connection therewith, such
documents and papers where appropriate to be certified by proper
corporate, governmental or judicial authorities.
(g) Representations and Warranties. All representations
and warranties contained in this Agreement and the other Loan Documents
or otherwise made in writing in connection herewith or therewith shall
be true and correct in all material respects on and as of the Amendment
Effective Date, and the Agent and the Banks shall have received a
certificate from a Financial Officer to such effect.
(h) No Default. On the Amendment Effective Date, the
Borrower and Guarantors shall be in compliance with all of the terms
and
6
<PAGE> 7
provisions set forth herein to be observed or performed and no Event of
Default or event which upon notice or lapse of time or both would
constitute an Event of Default shall have occurred and be continuing,
and the Agent and the Banks shall have received a certificate from a
Financial Officer to such effect.
16. Section 5.01 of the Credit Agreement is hereby
amended by deleting the word "and" set forth at the end of clause (n) thereof,
by deleting the period at the end of clause (o) and inserting in lieu thereof a
semicolon and the word "and", and by inserting a new clause "(p)" to read as
follows:
"(p) as soon as possible, and in any event not later
than February 22, 1998, a calculation of the Borrower's EBITDA
for the four fiscal quarters ending January 31, 1998, in
detail reasonably satisfactory to the Agent and certified by a
Financial Officer of the Borrower."
17. Section 6.04 of the Credit Agreement is hereby amended in
its entirety to read as follows:
SECTION 6.04. CAPITAL EXPENDITURES. Make Capital
Expenditures in an aggregate amount in excess of (i)
$36,000,000 during the period commencing on the Filing Date
and ending on February 3, 1996, (ii) $50,000,000 during the
fiscal year ending February 1, 1997, (iii) $30,000,000 during
the fiscal year ending January 31, 1998, (iv) $16,000,000
during the period thereafter through the Maturity Date or (v)
$45,000 000 pursuant to Capitalized Leases during the period
commencing at the beginning of the fiscal year ending February
1, 1997 and ending on the Maturity Date, PROVIDED that if the
Borrower shall have achieved its projected EBITDA for the
fiscal year ending January 31, 1998 as set forth in the
Borrower's Revised 1997 Business Plan (a copy of which has
heretofore been delivered to the Agent) and there shall not
have occurred and be continuing any Event of Default as of
such date, the amount of Capital Expenditures permitted under
clause (iv) above shall be increased to $19,000,000, and
PROVIDED, FURTHER, that in determining the amount of Capital
7
<PAGE> 8
Expenditures permitted under clauses (ii), (iii) and (iv)
above, such calculation shall not include that portion of
Capitalized Leases which is capitalized on the consolidated
balance sheet of the Borrower and the Guarantors during such
respective periods.
18. Section 6.05 of the Credit Agreement is hereby amended by
deleting from the table set forth therein the lines designated "Four fiscal
quarters ending April 30, 1997" and "Four fiscal quarters ending August 2, 1997"
and inserting in lieu thereof the following lines:
<TABLE>
<CAPTION>
PERIOD EBITDA
- ------ ------
<S> <C>
Four fiscal quarters ending May 3, 1997 $( 5,000,000)
Four fiscal quarters ending August 2, 1997 $ 4,000,000
Four fiscal quarters ending November 1, 1997 $ 12,000,000
Four fiscal quarters ending January 31, 1998 $ 35,000,000
Four fiscal quarters ending May 2, 1998 $ 38,000,000
</TABLE>
19. Section 6.06 of the Credit Agreement is hereby amended by
deleting from the table set forth therein all of the lines commencing with the
line designated "March 1, 1997" and inserting in lieu thereof the following
lines:
<TABLE>
<CAPTION>
PERIOD ENDING Inventory Amount
- ------------- ----------------
<S> <C>
March 1, 1997 $392,174,000
April 5, 1997 $402,362,000
May 3, 1997 $414,610,000
May 31, 1997 $411,925,000
July 5, 1997 $372,479,000
August 2, 1997 $387,022,000
</TABLE>
8
<PAGE> 9
<TABLE>
<S> <C>
August 30, 1997 $398,668,000
October 4, 1997 $421,841,000
November 1, 1997 $498,978,000
November 29, 1997 $469,693,000
January 3, 1998 $365,723,000
January 31, 1998 $350,626,000
February 28, 1998 $369,628,000
April 4, 1998 $383,540,000
May 2, 1998 $396,051,000
June 15, 1998 $395,125,000
</TABLE>
20. Section 6.12 of the Credit Agreement is hereby amended by
deleting clause (ii) thereof in its entirety and inserting in lieu thereof the
following:
"(ii) sales of assets having a fair market value not
exceeding (A) prior to the Amendment Effective Date,
$30,000,000 in the aggregate and (B) from and after the
Amendment Effective Date, $5,000,000 in the aggregate,
PROVIDED that the proceeds of sales permitted by the foregoing
subclause (B) are (x) segregated into an interest-bearing
account with the Agent and (y) applied with the consent of the
Required Banks, the Official Creditor's Committee and the
Official Equity Committee appointed in the Cases or pursuant
to an order of the Bankruptcy Court,"
21. Annex A to the Credit Agreement is hereby amended in its
entirety by replacing such annex with a new Annex A thereto in the form of Annex
A hereto.
22. The Exhibits to the Credit Agreement are hereby amended by
replacing Exhibits A-1 and A-2 thereto in their entirety with new Exhibits A-1
and A-2 thereto in the form of Exhibits A-1 and A-2 hereto.
23. This amendment shall not become effective until the date
(the "Amendment Effective Date") on which (i) this Amendment shall have been
executed by the Borrower, the Guarantors, the Banks and the Agent, and the Agent
shall have received evidence satisfactory to it of such execution and (ii) the
Agent shall have received evidence satisfactory to it that each of the
conditions precedent set forth in Section 4.04 of the Credit Agreement as
amended hereby have been satisfied.
24. Except to the extent hereby amended, the Credit Agreement
and each of the Loan Documents remain in full force and effect and are hereby
ratified and affirmed.
9
<PAGE> 10
25. The Borrower agrees that its obligations set forth in
Section 10.05 of the Credit Agreement shall extend to the preparation, execution
and delivery of this Amendment, including the reasonable fees and disbursements
of special counsel to the Agent.
26. The Borrower, the Guarantors, the Banks and the Agent
agree that promptly after the occurrence of the Amendment Effective Date they
shall execute and deliver a 1997 Amended and Restated Revolving Credit and
Guaranty Agreement reflecting in a single document the terms and provisions of
the Credit Agreement as heretofore modified and as modified by this Amendment.
27. This Amendment shall be limited precisely as written and
shall not be deemed (a) to be a consent granted pursuant to, or a waiver or
modification of, any other term or condition of the Credit Agreement or any of
the instruments or agreements referred to therein or (b) to prejudice any right
or rights which the Agent or the Banks may now have or have in the future under
or in connection with the Credit Agreement or any of the instruments or
agreements referred to therein. Whenever the Credit Agreement is referred to in
the Credit Agreement or any of the instruments, agreements or other documents or
papers executed or delivered in connection therewith, such reference shall be
deemed to mean the Credit Agreement as modified by this Amendment.
28. This Amendment may be executed in any number of
counterparts and by the different parties hereto in separate counterparts, each
of which when so executed and delivered shall be deemed to be an original and
all of which taken together shall constitute but one and the same instrument.
29. This Amendment shall be governed by, and construed in
accordance with, the laws of the State of New York.
IN WITNESS WHEREOF, the parties hereto have caused this
Amendment to be duly executed as of the day and the year first above written.
THE CALDOR CORPORATION
By:
------------------------
Title:
GUARANTORS:
CALDOR, INC.-CT
By:
------------------------
Title:
10
<PAGE> 11
CALDOR, INC.-NY
By:
------------------------
Title:
CAL LEASING, INC.
By:
------------------------
Title:
LACDOR REALTY CORP.
By:
------------------------
Title:
CALFAX, INC..
By:
------------------------
Title:
TRI-STATE ADVERTISING AGENCY, INC.
By:
------------------------
Title:
PREMIER SERVICE PROGRAMS, INC.
By:
------------------------
Title:
CALDOR-SILVER SPRING, INC.
By:
------------------------
Title:
CAL SILVER SPRING, INC.
By:
------------------------
Title:
TRANCHE A AND THE CHASE MANHATTAN BANK,
TRANCHE B Individually and as Agent
By:
------------------------
Title:
270 Park Avenue
New York, New York 10017
11
<PAGE> 12
TRANCHE A AND BANK OF AMERICA NATIONAL TRUST
TRANCHE B AND SAVINGS ASSOCIATION
By:
------------------------
Title:
335 Madison Avenue
New York, New York 10017
TRANCHE B ONLY BANK OF HAWAII
By:
------------------------
Title:
130 Merchant Street
Honolulu, Hawaii 96183
TRANCHE A AND THE BANK OF NEW YORK
TRANCHE B
By:
------------------------
Title:
One Wall Street
New York, New York 10286
TRANCHE A AND THE BANK OF NOVA SCOTIA
TRANCHE B
By:
------------------------
Title:
One Liberty Plaza
New York, New York 10006
TRANCHE B ONLY BANKERS TRUST COMPANY
By:
------------------------
Title:
130 Liberty Street, 19th Floor
New York, New York 10006
TRANCHE A AND BANQUE PARIBAS
TRANCHE B
By:
------------------------
Title:
787 Seventh Avenue
New York, New York 10019
12
<PAGE> 13
TRANCHE A ONLY BHF-BANK AKTIENGESELLSCHAFT
By:
------------------------
Title:
By:
------------------------
Title:
590 Madison Avenue
New York, New York 10022
TRANCHE A AND CIBC, INC.
TRANCHE B
By:
------------------------
Title:
425 Lexington Avenue
New York, New York 10017
TRANCHE B ONLY CERBERUS PARTNERS, L.P.
By:
------------------------
Title:
450 Park Avenue, 28th Floor
New York, New York 10022
TRANCHE A AND CREDIT LYONNAIS NEW YORK BRANCH
TRANCHE B
By:
------------------------
Title:
1301 Avenue of the Americas
New York, New York 10019
TRANCHE B ONLY THE DAI-ICHI KANGYO BANK,
LIMITED, NEW YORK BRANCH
By:
------------------------
Title:
1 World Trade Center, 48th Floor
New York, New York 10048
TRANCHE B ONLY DK ACQUISITION PARTNERS, L.P.
By:
------------------------
Title:
885 Third Avenue, Suite 810
New York, New York 10022
13
<PAGE> 14
TRANCHE A ONLY FLEET BANK, N.A.
By:
------------------------
Title:
40 Westminster Street
RI OP TO5A
Providence, Rhode Island 02901-0366
TRANCHE A ONLY FLEET NATIONAL BANK
By:
------------------------
Title:
40 Westminster Street
RI OP TO5A
Providence, Rhode Island 02901-0366
TRANCHE A AND THE FUJI BANK, LIMITED
TRANCHE B
By:
------------------------
Title:
Two World Trade Center
New York, New York 10048
TRANCHE A ONLY IBJ SCHRODER BANK & TRUST COMPANY
By:
------------------------
Title:
1 State Street
New York, New York 10004
TRANCHE B ONLY ING BARING (U.S.) CAPITAL
CORPORATION
By:
------------------------
Title:
135 East 57th Street
New York, New York 10022
TRANCHE A ONLY LEHMAN COMMERCIAL PAPER INC.
By:
------------------------
Title:
3 World Financial Center, 10th Floor
New York, New York 10285
14
<PAGE> 15
TRANCHE B ONLY THE LONG-TERM CREDIT BANK OF JAPAN,
LIMITED, NEW YORK BRANCH
By:
------------------------
Title:
165 Broadway, 49th Floor
New York, New York 10006
TRANCHE B ONLY MERRILL LYNCH, PIERCE, FENNER,
& SMITH INCORPORATED
By:
------------------------
Title:
World Financial Center
North Tower, 7th Floor
New York, New York 10281-1307
TRANCHE A AND MORGAN GUARANTY TRUST COMPANY OF
TRANCHE B NEW YORK
By:
------------------------
Title:
60 Wall Street
New York, New York 10260
TRANCHE B ONLY MUTUAL BEACON FUND
c/o FRANKLIN MUTUAL ADVISORS
By:
------------------------
Title:
51 John F. Kennedy Parkway
Short Hills, New Jersey 07078
TRANCHE B ONLY MUTUAL DISCOVERY FUND
c/o FRANKLIN MUTUAL ADVISORS
By:
------------------------
Title:
51 John F. Kennedy Parkway
Short Hills, New Jersey 07078
15
<PAGE> 16
TRANCHE B ONLY THE NIPPON CREDIT BANK, LTD.
By:
------------------------
Title:
245 Park Avenue, 30th Floor
New York, New York 10187
TRANCHE B ONLY PRIME INCOME TRUST
C/O DEAN WITTER INTERCAPITAL INC.
By:
------------------------
Title:
2 World Trade Center, 72nd Floor
New York, New York 10048
TRANCHE B ONLY SANWA BANK
By:
------------------------
Title:
55 East 52nd Street
New York, New York 10055
TRANCHE B ONLY SILVER OAK CAPITAL, L.L.C.
By:
------------------------
Title:
245 Park Avenue, 26th Floor
New York, New York 10167
TRANCHE A ONLY SUNTRUST BANK INC. (ORLANDO)
By:
------------------------
Title:
200 South Orange Avenue
Mail Code 1048 Tower 4
Orlando, Florida 32801
TRANCHE A AND UNION BANK OF CALIFORNIA, N.A.
TRANCHE B
By:
------------------------
Title:
445 South Figueroa Street
MC GO4-421
Los Angeles, California 90071-1602
16
<PAGE> 17
TRANCHE B ONLY THE YASUDA TRUST AND BANKING
COMPANY, LTD.
By:
------------------------
Title:
666 Fifth Avenue, Suite 801
New York, New York 10103
17
<PAGE> 18
EXHIBIT A-1
TO
FOURTH AMENDMENT
PROMISSORY NOTE
(TRANCHE A)
$________________ New York, New York
May __, 1997
FOR VALUE RECEIVED, THE CALDOR CORPORATION, a Delaware corporation (the
"Borrower"), as Debtor and Debtor-in-Possession under Chapter 11 of Title 11 of
the United States Code (the "Code"), DOES HEREBY PROMISE to pay to the order of
______________ (the "Bank"), at the office of The Chase Manhattan Bank, a New
York banking corporation, _________________ DOLLARS ($___________) or the
aggregate unpaid principal amount of all Tranche A Loans (as defined in the
Agreement hereinafter referred to) made by the Bank to the Borrower pursuant to
the Agreement, whichever is less, in lawful money of the United States of
America on the Maturity Date (as defined in the Agreement) or such earlier date
or dates and in such amounts as are required by the Agreement, and to pay
interest on the unpaid principal amount from time to time outstanding hereunder,
in like money, at such office, as set forth in the Agreement.
This Note is one of the Tranche A Notes referred to in that certain
Amended and Restated Revolving Credit and Guaranty Agreement, dated as of
October 17, 1995, as the same may be amended, modified or supplemented from time
to time (the "Agreement"), among the Borrower, each of the Guarantors party
thereto, the Bank and certain other banks (collectively, including the Bank, the
"Banks"), and The Chase Manhattan Bank (formerly known as Chemical Bank), as
agent (in such capacity, the "Agent") for the Banks, which, among other things,
contains provisions for the acceleration of the maturity hereof upon the
happening of certain events, for prepayment of the principal hereof prior to the
maturity thereof and for the amendment or waiver of certain provisions of the
Agreement, all upon the terms and conditions specified therein. Pursuant to
Section 364(c)(1) of the Code, the obligations of the Borrower evidenced by this
Note constitute allowed administrative expense claims entitled to priority over
all unsecured claims in the Borrower's Chapter 11 case, including, without
limitation, all administrative expenses of the kind specified in Sections 503(b)
and 507(b) of the Bankruptcy Code, subject to the Carve-Out referred to in the
Agreement.
Pursuant to Sections 364(c)(2) and (c)(3) and Section 364(d)(1) of the
Bankruptcy Code, this Note is secured by certain assets and properties of the
Borrower and the Guarantors referred to in the Agreement and in the other Loan
Documents (as defined in the Agreement).
<PAGE> 19
This Note shall be governed by, and construed in accordance with, the
laws of the State of New York and applicable federal law of the United States
(including, without limitation, the Code).
THE CALDOR CORPORATION
By:
------------------------
Title:
<PAGE> 20
EXHIBIT A-2
TO
FOURTH AMENDMENT
PROMISSORY NOTE
(TRANCHE B)
$________________ New York, New York
May __, 1997
FOR VALUE RECEIVED, THE CALDOR CORPORATION, a Delaware corporation (the
"Borrower"), as Debtor and Debtor-in-Possession under Chapter 11 of Title 11 of
the United States Code (the "Code"), DOES HEREBY PROMISE to pay to the order of
______________ (the "Bank"), at the office of The Chase Manhattan Bank, a New
York banking corporation, _________________ DOLLARS ($___________) or the
aggregate unpaid principal amount of all Tranche B Loans (as defined in the
Agreement hereinafter referred to) made by the Bank to the Borrower pursuant to
the Agreement, whichever is less, in lawful money of the United States of
America on the Maturity Date (as defined in the Agreement) or such earlier date
or dates and in such amounts as are required by the Agreement, and to pay
interest on the unpaid principal amount from time to time outstanding hereunder,
in like money, at such office, as set forth in the Agreement.
This Note is one of the Tranche B Notes referred to in that certain
Amended and Restated Revolving Credit and Guaranty Agreement, dated as of
October 17, 1995, as the same may be amended, modified or supplemented from time
to time (the "Agreement"), among the Borrower, each of the Guarantors party
thereto, the Bank and certain other banks (collectively, including the Bank, the
"Banks"), and The Chase Manhattan Bank (formerly known as Chemical Bank), as
agent (in such capacity, the "Agent") for the Banks, which, among other things,
contains provisions for the acceleration of the maturity hereof upon the
happening of certain events, for prepayment of the principal hereof prior to the
maturity thereof and for the amendment or waiver of certain provisions of the
Agreement, all upon the terms and conditions specified therein. Pursuant to
Section 364(c)(1) of the Code, the obligations of the Borrower evidenced by this
Note constitute allowed administrative expense claims entitled to priority over
all unsecured claims in the Borrower's Chapter 11 case, including, without
limitation, all administrative expenses of the kind specified in Sections 503(b)
and 507(b) of the Bankruptcy Code, subject to the Carve-Out referred to in the
Agreement.
Pursuant to Sections 364(c)(2) and (c)(3) and Section 364(d)(1) of the
Bankruptcy Code, this Note is secured by certain assets and properties of the
Borrower and the Guarantors referred to in the Agreement and in the other Loan
Documents (as defined in the Agreement).
<PAGE> 21
This Note shall be governed by, and construed in accordance with, the
laws of the State of New York and applicable federal law of the United States
(including, without limitation, the Code).
THE CALDOR CORPORATION
By:
------------------------
Title:
<PAGE> 1
Exhibit 15
June 6, 1997
The Caldor Corporation
Norwalk, Connecticut
We have made a review, in accordance with standards established by the American
Institute of Certified Public Accountants, of the unaudited interim financial
information of The Caldor Corporation (Debtor-In-Possession) and subsidiaries
("Caldor") for the periods ended May 3, 1997 and May 4, 1996, as indicated in
our report dated June 6, 1997; because we did not perform an audit, we expressed
no opinion on the information.
We are aware that our report referred to above, which is included in your
Quarterly Report on Form 10-Q for the quarter ended May 3, 1997, is incorporated
by reference in a) Registration Statement No. 33-44996 of Caldor on Form S-8, b)
Registration Statement No. 33-41321 of Caldor on Form S-8, c) Registration
Statement No. 33-51510 of Caldor on Form S-8, d) Registration Statement No.
33-67438 of Caldor on Form S-8 and e) Registration Statement No. 33-84526 of
Caldor on Form S-8.
We also are aware that the aforementioned report, pursuant to Rule 436(c) under
the Securities Act, is not considered a part of the Registration Statement
prepared or certified by an accountant or a report prepared or certified by an
accountant within the meaning of Section 7 and 11 of that Act.
DELOITTE & TOUCHE LLP
New York, New York
<TABLE> <S> <C>
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<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JAN-31-1998
<PERIOD-START> FEB-02-1997
<PERIOD-END> MAY-03-1997
<CASH> 35,526
<SECURITIES> 0
<RECEIVABLES> 14,099
<ALLOWANCES> 0
<INVENTORY> 507,068
<CURRENT-ASSETS> 596,725
<PP&E> 697,992
<DEPRECIATION> 201,722
<TOTAL-ASSETS> 1,100,045
<CURRENT-LIABILITIES> 518,723
<BONDS> 299,741
0
0
<COMMON> 169
<OTHER-SE> (184,608)
<TOTAL-LIABILITY-AND-EQUITY> 1,100,045
<SALES> 525,635
<TOTAL-REVENUES> 525,635
<CGS> 385,197
<TOTAL-COSTS> 385,197
<OTHER-EXPENSES> 160,088
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 10,391
<INCOME-PRETAX> (36,315)
<INCOME-TAX> 0
<INCOME-CONTINUING> (36,315)
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<NET-INCOME> (36,315)
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