FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
/X/ QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended October 26, 1996
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 1-10590
VENTURE STORES, INC.
(Exact name of registrant as specified in its charter)
Delaware 43-0914490
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2001 East Terra Lane, O'Fallon, Missouri 63366-0110
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (314)281-5500
Not Applicable
(Former name, former address and former fiscal year,
if changed since last report)
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
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of October 26, 1996:
Common stock, $1 par value - 18,262,525
PART I - FINANCIAL INFORMATION
Item 1 - Financial Statements
Venture Stores, Inc.
Condensed Statement of Earnings
(Unaudited)
(thousands, except per share data)
13 WEEKS ENDED 39 WEEKS ENDED
October 26, October 28, October 26, October 28,
1996 1995 1996 1995
Net Sales $ 330,233 $ 444,612 $1,010,896 $1,342,358
Costs and expenses:
Cost of merchandise
sold 246,506 345,460 753,060 1,026,136
Selling, general,
administrative and
other expenses 93,352 114,135 258,777 357,721
Net interest expense 7,262 4,779 19,873 12,204
Earnings (loss) before
income taxes (16,887) (19,762) (20,814) (53,703)
Income tax provision
(benefit) (7,684) (7,182) (9,538) (20,590)
NET EARNINGS (LOSS) $ (9,203) $ (12,580) $ (11,276) $ (33,113)
Dividends on preferred
stock 625 625 1,875 1,875
NET EARNINGS (LOSS)
AVAILABLE TO COMMON
SHAREOWNERS $ (9,828) $ (13,205) $ (13,151) $ (34,988)
EARNINGS (LOSS) PER
COMMON SHARE $ (0.54) $ (0.76) $ (0.73) $ (2.02)
DIVIDENDS DECLARED PER
COMMON SHARE $ 0.000 $ 0.000 $ 0.000 $ 0.215
AVERAGE COMMON SHARES
OUTSTANDING 18,257 17,316 17,947 17,296
See accompanying Notes to Condensed Financial Statements.
Venture Stores, Inc.
Condensed Balance Sheet
(thousands)
(Unaudited) (Unaudited)
October 26, October 28, January 27,
1996 1995 1996
ASSETS
Current assets:
Cash and cash equivalents $ 11,656 $ 17,468 $ 57,465
Accounts receivable, net 16,058 12,751 14,290
Merchandise inventories 407,202 386,555 303,200
Prepaid income taxes 13,371 22,908 13,663
Other current assets 11,584 7,934 7,746
Total current assets 459,871 447,616 396,364
Property and equipment, at cost 537,401 529,875 531,763
Accumulated depreciation (169,137) (157,085) (145,212)
Property and equipment, net 368,264 372,790 386,551
Other assets 6,575 4,181 5,228
TOTAL ASSETS $ 834,710 $ 824,587 $ 788,143
LIABILITIES AND SHAREOWNERS'
INVESTMENT
Current liabilities:
Short-term debt $ 164,530 $ 114,000 $ 115,000
Current maturities of long-
term debt 4,276 8,090 3,905
Accounts payable 147,643 184,574 132,806
Accrued expenses 52,224 100,306 84,036
Total current liabilities 368,673 406,970 335,747
Long-term debt 180,187 145,393 168,529
Other liabilities 3,745 3,945 3,915
Deferred gain on sale/leaseback 19,429 20,866 20,507
Deferred income taxes 32,854 18,765 18,440
Deferred investment tax credit(ITC) - 116 56
Shareowners' investment 229,822 228,532 240,949
TOTAL LIABILITIES AND SHAREOWNERS'
INVESTMENT $ 834,710 $ 824,587 $ 788,143
See accompanying Notes to Condensed Financial Statements.
Venture Stores, Inc.
Condensed Statement of Cash Flows
(Unaudited)
(dollars in thousands, except per share)
39 WEEKS ENDED
October 26, October 28,
1996 1995
OPERATING ACTIVITIES:
Net earnings (loss) $ (11,276) $ (33,113)
Items not requiring the outlay of cash:
Depreciation and amortization 23,992 23,744
Deferred income tax and ITC 14,358 (621)
Other 1,391 0
Working capital and other (124,197) (118,971)
Total operating activities (95,732) (128,961)
INVESTING ACTIVITIES:
Additions of property and equipment (11,020) (34,469)
Proceeds from sale of assets 3,017 0
Other 556 1,110
Total investing activities (7,447) (33,359)
FINANCING ACTIVITIES:
Repayments of long-term debt (2,971) (2,298)
Proceeds from sale/leaseback 15,000 0
Short-term borrowings 49,530 114,000
Dividends (1,875) (5,590)
Proceeds from exercised stock options 0 569
Other (2,314) (267)
Total financing activities 57,370 106,414
DECREASE IN CASH AND CASH EQUIVALENTS (45,809) (55,906)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 57,465 73,374
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 11,656 $ 17,468
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid (received) during the period:
Interest $ 18,780 $ 11,149
Income taxes $ (26,252) $ 11,019
During the first quarter of 1996, the company made a non-cash contribution
of its common stock to the Venture Profit Sharing Plan, which represented
the entire 1995 company contribution. This contribution consisted of
199,985 shares of common stock with an average market price of $4.80 per
share. During the second quarter of 1996, the company granted 704,200
shares of restricted stock with a market price of $7.75 per share on the
date of grant. Through the end of the third quarter of 1996, $1,054 was
charged to expense related to these shares of restricted stock, which will
vest no later than five years from the date of grant.
See accompanying Notes to Condensed Financial Statements.
VENTURE STORES, INC.
NOTES TO CONDENSED FINANCIAL STATEMENTS
1. INTERIM PRESENTATION
The accompanying unaudited condensed financial statements
should be read in conjunction with the audited financial
statements for the fiscal year ended January 27, 1996, and
the accompanying notes thereto included in the company's
1995 Annual Report to Shareowners. In the opinion of
management, this information is fairly presented and all
adjustments, of a normal, recurring nature, which are
necessary for a fair statement of the results for the
interim periods have been included; however, certain items
are included in these statements based on estimates for the
entire year. The interim operating results exclude the
Christmas season and therefore may not be indicative of the
operating results that may be expected for the full fiscal
year. Certain prior year items have been reclassified to
conform to the current year presentation.
2. Net earnings (loss) per common share are computed by
dividing net earnings (loss), after deducting preferred
dividend requirements, by the weighted average number of
common shares outstanding. Common stock equivalents had no
material dilutive effect on net earnings (loss) per common
share during the periods presented.
3. In March 1995, the Financial Accounting Standards Board
issued Statement of Financial Accounting Standards (SFAS)
No. 121, "Accounting for the Impairment of Long-Lived Assets
and for Long-Lived Assets to be Disposed Of." This standard
requires that long-lived assets and certain intangibles and
goodwill related to those assets to be held and used be
reviewed for impairment whenever events or changes in
circumstances indicate that the carrying amount may not be
recoverable. This standard also requires that long-lived
assets and certain identifiable intangibles to be disposed
of be reported at the lower of carrying amount or fair value
less cost to sell. In the first quarter of 1996, the
company adopted this statement and determined that no
impairment loss needs to be recognized.
4. On January 29, 1996, the company sold six store properties
for $15.0 million. Simultaneously the company entered into
a 25-year below market lease of the properties with the new
owner. The transaction was accounted for as a financing in
accordance with SFAS No. 98, "Accounting for Leases," and
the related obligation is included in long-term debt and
current maturities of long-term debt. The obligation is
being amortized over the lease term. The minimum annual
rent which the company is obligated to pay during the lease
term is $1.9 million.
5. In May 1996, the shareowners approved an amendment to the
Venture Stores, Inc. 1992 Long Term Performance Plan, to
allow for implementation of a restricted stock program for
key executives. Under the plan, incentive stock options,
nonqualified stock options, stock appreciation rights,
restricted stock, and performance awards may be granted.
Options granted under the plan will be granted at the market
price on the date of grant, have a maximum term of 10 years,
may be exercised in installments only after stated intervals
of time, and are conditioned upon continued active
employment with the company, except for periods following
retirement, disability or death. Restricted stock grants
may be issued at a purchase price less than market price on
the date of grant, or as a bonus, and may be subject to
restrictions, conditions, terms and/or performance goals
such as return on net assets, earnings per share, share
price change, return on equity, free cash flow per share and
operating earnings. A maximum of 1.5 million shares of
common stock may be issued under the plan. On May 24, 1996,
704,200 shares of restricted stock were granted under the
plan. On November 15, 1996, 62,500 of these shares were
retired in connection with the grantee's termination of
employment. On November 25, 1996, 160,425 of the shares
granted on May 24, 1996, became fully vested.
6. On June 28, 1996, the company terminated its unsecured
credit facility with several domestic and foreign banks and
entered into an agreement with BankAmerica Business Credit,
Inc., as agent, and a syndicate of financial institutions
for a secured revolving credit facility (the "Credit
Facility") consisting of revolving credit loans and letters
of credit of up to $225 million in the aggregate, with a
sublimit of $125 million for letters of credit. The Credit
Facility is in effect until June 27, 1999, and is secured by
the inventory, equipment, and substantially all other assets
of the company, excluding real estate and certain property
under leases. The Credit Facility requires the company to
meet certain quarterly covenants, including a fixed charge
coverage ratio. On October 15, 1996, the Credit Facility was
amended to reduce the minimum fixed charge coverage ratio
applicable to the two fiscal quarter period ended October
26, 1996. Under the terms of the Credit Facility, the
company is prohibited from paying dividends on its common
stock. As of October 26, 1996, the company was in
compliance with these covenants, as amended.
Interest on borrowings under the Credit Facility is payable
based on multiple rate options. Additionally, the company
is required to pay certain unused line fees and letter of
credit fees.
Item 2 - Management's Discussion and Analysis of Financial
Condition and Results of Operations
RESULTS OF OPERATIONS
Third quarter 1996 sales were $330.2 million, down 25.7% from
$444.6 million during the same period in 1995. Comparable store
sales for the third quarter declined 22.4%. For the 39 weeks
ended October 26, 1996, sales were $1,010.9 million, a decrease
of 24.7% from $1,342.4 million in the 39 weeks ended October 28,
1995. Comparable store sales for the year-to-date period declined
21.5%. Total sales for the third quarter and year-to-date were
negatively impacted by the closing of six stores on March 30,
1996 and the conversion of four stores to temporary chain-wide
clearance centers. The company reopened one clearance center in
Houston, Texas as a family value store on June 7, 1996, reopened
four stores in Indianapolis (two of which were operating as
clearance centers and two of which were closed) on July 31, 1996,
and reopened one closed store in Houston, Texas on October 17,
1996. Sales for both periods of 1996 were also negatively
impacted by the elimination or reduction of historically low-
margin product lines, including certain categories of hardware,
automotive, and sporting goods, in connection with the company's
margin based repositioning strategy. The company's plans reflect
a store-for-store sales decline for the fourth quarter of 1996.
Loss per common share for the third quarter and year-to-date
periods of 1996 was $0.54 and $0.73, respectively, compared with
loss per common share of $0.76 and $2.02 for the comparable 1995
periods. Net loss applicable to common shareowners was $9.8
million and $13.2 million for the third quarter and first 39
weeks of 1996, respectively, as compared with net loss applicable
to common shareowners of $13.2 million and $35.0 million for the
comparable 1995 periods. The first 39 weeks of 1996 included a
pre-tax gain from a real estate transaction of $2.1 million, or
$0.07 per share, related to the reduction of recorded reserves on
a closed store for which a sublease was signed, subject to the
landlord's approval.
Third quarter of 1995 included nonrecurring charges of $5.3
million ($3.3 million after-tax or $0.19 per share) incurred in
connection with the company's expense reduction and repositioning
programs. Of the total third quarter 1995 nonrecurring charges,
$3.5 million is included in cost of merchandise sold and $1.8
million is included in selling, general, administrative and other
expenses. Year-to-date 1995 included nonrecurring charges of
$24.9 million ($15.1 million after-tax or $0.88 per share) to
complete the image builder program, for the closing of three
stores in August of 1995, and for the expense reduction and
repositioning programs. Of the year-to-date amount, $3.8 million
is included in cost of merchandise sold and $21.1 million is
included in selling, general, administrative and other expenses.
The components of the net earnings (loss) as a percent of sales
were as follows:
13 Weeks Ended 39 Weeks Ended
Oct. 26, Oct. 28, Oct. 26, Oct. 28,
1996 1995 1996 1995
Net sales 100.0% 100.0% 100.0% 100.0%
Cost of merchandise sold
(before LIFO charge) 74.5 77.5 74.4 76.4
LIFO charge 0.1 0.1 0.1 0.1
Gross margin 25.4 22.4 25.5 23.5
Selling, general, admin.
and other expenses 28.3 25.7 25.6 26.6
Operating loss (2.9) (3.3) (0.1) (3.1)
Net interest expense 2.2 1.1 2.0 0.9
Loss before income taxes (5.1) (4.4) (2.1) (4.0)
Income tax benefit (2.3) (1.6) (1.0) (1.5)
Net loss (2.8)% (2.8)% (1.1)% (2.5)%
Gross margin as a percent of sales increased during the third
quarter and first 39 weeks of 1996 over the same periods from the
prior year primarily due to an increase in sales of higher margin
softline items as a percentage of sales, the exiting or
downsizing of historically low-margin product lines and expansion
of merchandise assortments in home, family apparel, and leisure
categories as part of the repositioning, and reduced permanent
markdowns in the 1996 periods. The company's forecast reflects a
decline in gross margin as a percent of sales in the fourth
quarter of 1996, compared with the third quarter and first 39
weeks of 1996, based on anticipated promotional pricing.
The third quarter of 1996 included a LIFO charge of $0.5 million,
compared with a LIFO charge of $0.6 million in the third quarter
of 1995. For the first 39 weeks of 1996, LIFO was $0.5 million,
compared with a LIFO charge of $1.4 million for the same period
in 1995.
Selling, general, administrative and other expenses decreased in
the third quarter and year-to-date periods of 1996 compared to
the third quarter and year-to-date periods of 1995, largely due
to the company's expense reduction and stringent cost control
efforts. As a percent of sales, however, selling, general,
administrative and other expenses increased in the third quarter
of 1996, primarily due to the decline in sales and the
anniversary of the second quarter of 1995 reduction in workforce.
Payroll and payroll taxes decreased $17.9 million and $59.0
million in the third quarter and first 39 weeks of 1996 compared
to the same periods of 1995 as a result of the reduction of the
workforce by approximately 950 positions during the second
quarter of 1995, the elimination of 390 sales support positions
in connection with a realignment of the company's store
organization in the first quarter of 1996, and the decrease in
the number of stores from the quarter and year-to-date periods of
1995 to the same periods in 1996. These decreases in payroll
were partially offset by a $2.0 million increase in payroll as a
result of increasing the number of associates in the stores on
weekends to enhance service and speed up check out lanes as part
of customer satisfaction initiatives implemented in the third
quarter of 1996. As previously discussed, selling, general,
administrative and other expenses for the third quarter and year-
to-date periods of 1995 included nonrecurring charges of $1.8
million and $21.1 million, respectively. Other factors
contributing to the decrease in selling, general, administrative
and other expenses were a decrease in retirement expense as a
result of the suspension of benefit accruals under the retirement
plan as of January 1, 1996 and reduction of certain previously
provided benefit accruals; a decrease in insurance expense
resulting from favorable claims experience, the impact of the
reduction in the workforce, and the reduction of certain
insurance accruals no longer required; the reduction of recorded
reserves on a closed store as described above; the reversal of
property construction accruals no longer required; and a decrease
in credit card fees paid due to the decline in sales.
Net interest expense increased during the third quarter and
first 39 weeks of 1996 compared to the same periods in 1995 due
to the increase in short-term borrowings and the financing
obligation resulting from the sale/leaseback transactions in the
fourth quarter of 1995 and the first quarter of 1996.
FINANCIAL CONDITION
On June 28, 1996, the company terminated its unsecured credit
facility with several domestic and foreign banks and entered into
an agreement with BankAmerica Business Credit, Inc., as agent,
and a syndicate of financial institutions for a secured revolving
credit facility (the "Credit Facility") consisting of revolving
credit loans and letters of credit of up to $225 million in the
aggregate, with a sublimit of $125 million for letters of credit.
The Credit Facility is in effect until June 27, 1999, and is
secured by the inventory, equipment, and substantially all other
assets of the company, excluding real estate and certain property
under leases. The Credit Facility requires the company to meet
certain quarterly covenants, including a fixed charge coverage
ratio. On October 15, 1996, the Credit Facility was amended to
reduce the minimum fixed charge coverage ratio applicable to the
two fiscal quarter period ended October 26, 1996. Under the
terms of the Credit Facility, the company is prohibited from
paying dividends on its common stock. As of October 26, 1996,
the company was in compliance with these covenants, as amended.
The company's ability to comply with these covenants in the
future is dependent upon various factors including, but not
limited to, future sales and gross margin rates.
Interest on borrowings under the Credit Facility is payable based
on multiple rate options. Additionally, the company is required
to pay certain unused line fees and letter of credit fees.
The company's debt-to-capitalization ratio (including the present
value of operating leases) was 68.3% at October 26, 1996 compared
to 66.9% at the end of the third quarter of 1995 and 66.3% at
year-end 1995.
The decrease in current maturities of long-term debt from third
quarter of 1995 to third quarter of 1996 is due to a $5.0 million
prepayment, made in the fourth quarter of 1995, under the terms
of an amendment to the company's secured loan agreement with
Principal Mutual Life Insurance Company entered into in the third
quarter of 1995.
During the first quarter of 1996, the company completed a
sale/leaseback of six store properties for $15.0 million. The
sale/leaseback was accounted for as a financing transaction in
accordance with Statement of Financial Accounting Standards No.
98, "Accounting for Leases", because of the below market rents.
The proceeds from the sale/leaseback were used to meet working
capital and capital expenditure needs associated with the
repositioning and for other corporate purposes. The obligation
from the sale/leaseback is included in long-term debt and current
maturities of long-term debt. The $15.0 million sale/leaseback,
net of regularly-scheduled maturities of long-term debt and
capital leases, caused the increase in long-term debt between
year-end 1995 and third quarter 1996.
Long-term debt increased between the third quarters of 1995 and
1996 primarily due to obligations from the $15.0 million
sale/leaseback in the first quarter of 1996 and the $25.0 million
sale/leaseback of 10 store properties in the fourth quarter of
1995, net of other regularly-scheduled maturities of long-term
debt and capital leases.
During the third quarter of 1996, (i) Moody's Investor Services
lowered the ratings of the company's medium term notes from Ba2
to B1 and lowered the ratings on the company's preferred stock
from ba3 to b2, and (ii) Standard & Poor's lowered the ratings of
the company's medium term notes and 6.75% revenue bonds due March
1, 2009 from BB- to B. Debt ratings by various rating agencies
reflect the agencies' opinions of the ability of the issuers to
repay debt obligations punctually. Lower ratings generally
result in higher future borrowing costs.
The increase in short-term debt and decrease in accounts payable
at October 26, 1996 compared with October 28, 1995 reflect the
company's greater reliance on short-term debt to fund working
capital as a result of reduced sales and the net loss. The
decrease in accounts payable is primarily due to a reduction in
receipts of merchandise in the current year compared to last year
based on the company's sales trend.
The increase in non-current deferred income taxes resulted
primarily from the sale/leaseback of 16 store properties in 1995
and 1996. For book purposes, the sale/leaseback transactions
were recorded under the financing method with no gain or loss
recognized. The properties continue to be reported as assets on
the books of the company. As future book depreciation is
recorded on the sale/leaseback assets, the related deferred
income tax liability will be reduced. The decrease in prepaid
income taxes at third quarter 1996 over third quarter 1995 is
primarily the result of a larger net operating loss in the first
three quarters of 1995.
The increase in merchandise inventories between year-end 1995 and
third quarter 1996 is principally the result of lower sales, the
normal build-up of stock in anticipation of the year-end selling
season, and the addition of higher-priced merchandise to support
the company's "good, better, best" assortments as part of the
repositioning. The increase in merchandise inventories between
third quarter of 1995 and third quarter of 1996 is primarily due
to lower sales and the addition of higher-priced merchandise.
A $.9 million increase in prepaid advertising expense, a $.8
million increase in deferred preopening expenses for stores that
will reopen in 1996, and a $.9 million increase in prepaid
advertising paper contributed to most of the increase in other
current assets from the third quarter of 1995. The increase in
other current assets in third quarter 1996 from year-end 1995
resulted primarily from a $2.1 million increase in prepaid
advertising expense.
The decrease in accrued expenses in the third quarter of 1996
over year-end 1995 is largely due to a $15.9 million reduction in
accrued liabilities resulting from the payment of construction in
process costs related principally to remodeling and refixturing
for the repositioning which was completed in the first quarter of
1996 and a $6.9 million decrease in reserves related to store
closings. A decrease in accrued severance costs and a decrease
in payroll, benefit, and insurance accruals resulting from the
reduced workforce and the suspension of benefit accruals under
the retirement plan and profit sharing plan also contributed to
the decrease in accrued expenses in the third quarter of 1996
over year end 1995. The decrease in accrued expenses in the
third quarter of 1996 over the third quarter of 1995 is primarily
due to a $15.2 million decrease in payroll, benefit, and
insurance accruals resulting from the reduced workforce, the
suspension of benefit accruals under the retirement plan and
profit sharing plan, and favorable claims experience, a $16.3
million decrease in reserves related to store closings, a $8.2
million decrease in real estate and personal property taxes, and
a $1.1 million decrease in the accrual for nonrecurring costs in
connection with the image builder program. A decrease in
construction in process and accrued sales and use tax also
contributed to the decrease in accrued expenses in third quarter
1996 over third quarter 1995.
The capital expenditure budget totals approximately $18.0 million
for 1996, including approximately $2.5 million for one new store
in the metropolitan St. Louis, Missouri area, which opened on
November 1, 1996, and which was a conversion of an existing
building. The decline in capital expenditures from $34.5 million
in the first 39 weeks of 1995 to $11.0 million in the first 39
weeks in 1996 is primarily due to the fact that there was only
one new store opening in 1996, which occurred subsequent to the
third quarter. Two stores were opened in the first quarter of
1995 (one in Houston and one in Amarillo, Texas), two stores were
opened during the second quarter of 1995 (one in Fort Worth and
one in Houston, Texas), and one store was opened in Houston,
Texas during the third quarter of 1995. Six stores were closed
in the first quarter of 1996 (three in Indianapolis, one in
Chicago, one in Houston, and one in Champaign, Illinois), and
four stores (two in Indianapolis, one in Chicago, and one in
Houston) were converted to clearance center formats temporarily
to facilitate the conversion to a family value store. During the
second quarter of 1996, the company reopened the clearance center
in Houston, Texas, as a family value store. During the third
quarter of 1996, the company reopened four stores in Indianapolis
(two of which were operating as clearance centers and two of
which were closed) as family value stores and reopened one store
in Houston. Subsequent to the third quarter of 1996, the company
reopened the last remaining clearance center as a family value
store in Chicago.
Subsequent to the third quarter of 1996, the company opened nine
Venture Dollar stores in existing trade areas to test-market the
new concept. The Venture Dollar stores will carry convenience-
oriented, low-priced items and will be approximately 7,000 to
10,000 square feet in size.
Certain of the matters discussed above, such as the company's
expectations with respect to fourth quarter 1996 sales and gross
margin rates, future ability to meet the financial covenants
under the Credit Facility, and future capital expenditures,
constitute "forward looking" statements and as such are based on
assumptions and estimates. Actual results may differ materially
from those in the forward-looking statements. Factors that could
cause actual results to differ materially from the forward-
looking statements include, but are not limited to: (i) economic
and weather conditions in the regions in which the company's
stores are located and their effect on the buying patterns of the
company's customers, (ii) consumer spending and debt levels,
(iii) the level of support provided by the company's numerous
providers of goods and services, (iv) inventory imbalances caused
by fluctuations in consumer demand, (v)competition, including
specifically price competition, (vi) cost and availability of
capital, and (vii) the success of the company's repositioning
strategy.
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
10 First Amendment, dated October 15, 1996, to the
Loan and Security Agreement, dated as of June 28,
1996, between the company and BankAmerica Business
Credit, Inc. as Agent.
11 Computation of Earnings per Common Share
27 Financial Data Schedule
(b) Reports on Form 8-K
There were no reports on Form 8-K filed during the quarter
ended October 26, 1996.
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.
VENTURE STORES, INC.
(Registrant)
Date: December 9, 1996 By:\s\Eugene Caldwell
Eugene Caldwell
Senior Vice President
Chief Financial Officer
Exhibit Index
Exhibit
Number Description
10 First Amendment, dated October 15, 1996, to the
Loan and Security Agreement, dated as of June
28, 1996, between the company and BankAmerica
Business Credit, Inc. as Agent.
11 Computation of Earnings per Common Share
27 Financial Data Schedule
Exhibit 10
October 15, 1996
Venture Stores, Inc.
2001 East Terra Lane
O'Fallon, MO 63366-0110
Re: First Amendment to Loan and Security Agreement
Ladies/Gentlemen:
Reference is hereby made to that certain Loan and Security Agreement ("the
Agreement"), dated as of June 28, 1996 and executed by and among Venture
Stores, Inc. (the "Borrower"), the financial institutions party thereto
(collectively, the "Lenders") and BankAmerica Business Credit, Inc., as
agent for the Lenders (in such capacity as agent, the "Agent"). Certain
capitalized terms used herein and not otherwise defined shall have the
meanings attributed to them in the Agreement.
The Agent, the Lenders and the Borrower hereby agree as follows:
1. Section 8.21 of the Agreement is hereby amended by deleting the
minimum ratio ".61 to 1" appearing therein and replacing it with the
minimum ratio ".25 to 1".
2. This letter agreement shall be interpreted and the rights and
liabilities of the parties hereto determined in accordance with the
internal laws (as opposed to the conflict of laws provisions) of the
State of Illinois.
Except to the extent modified herein, the Agreement remains in full force
and effect and is hereby ratified and confirmed. Please evidence your
agreement with the terms of this letter agreement by signing in the space
below. This letter agreement may be executed by one or more of all the
parties hereto on any number of counterparts, and all of said counterparts
taken together shall be deemed to constitute one and the same instrument.
This letter agreement shall become effective in accordance with its terms
upon its execution by the Agent, the Lenders and the Borrower.
Sincerely,
BANKAMERICA BUSINESS CREDIT, INC.,
as the Agent
By:\s\Gregory Eck
Name:Gregory Eck
Title:Vice President
BANKAMERICA BUSINESS CREDIT, INC.,
as a Lender
By:\s\Gregory Eck
Name:Gregory Eck
Title:Vice President
THE CIT GROUP/BUSINESS CREDIT, INC.,
as a Lender
By:\s\Martha Hoag-Schmitt
Name:Martha Hoag-Schmitt
Title:AVP
CONGRESS FINANCIAL CORPORATION,
as a Lender
By:\s\Thomas C. Lannon
Name:Thomas C. Lannon
Title:Vice President
LA SALLE BUSINESS CREDIT, INC.,
as a Lender
By:\s\Jeffrey J. Podwika
Name:Jeffrey J. Podwika
Title:Asset Based Lending Officer
GENERAL ELECTRIC CAPITAL CORPORATION,
as a Lender
By:\s\Timothy S. Van Kirk
Name:Timothy S. Van Kirk
Title:Duly Authorized Signature
ACCEPTED AND AGREED:
VENTURE STORES, INC.
By:\s\Eugene Caldwell
Name:Eugene Caldwell
Title:CFO
Venture Stores, Inc.
Computation of Earnings Per Share
(thousands, except per share data) EXHIBIT 11
13 WEEKS ENDED 39 WEEKS ENDED
Oct. 26, Oct. 28, Oct. 26, Oct. 28,
1996 1995 1996 1995
Net earnings (loss) $ (9,203) $ (12,580) $ (11,276) $ (33,113)
Less Preferred dividend (625) (625) (1,875) (1,875)
Net earnings (loss) avail.
to common shareowners $ (9,828) $ (13,205) $ (13,151) $ (34,988)
Average outstanding shares 18,257 17,316 17,947 17,296
Earnings (Loss) per common
share $ (0.54) $ (0.76) $ (0.73) $ (2.02)
PRIMARY:
Net earnings (loss) $ (9,203) $ (12,580) $ (11,276) $ (33,113)
Less Preferred dividend (625) (625) (1,875) (1,875)
Net earnings (loss) avail.
to common shareowners $ (9,828) $ (13,205) $ (13,151) $ (34,988)
Average outstanding shares 18,257 17,316 17,947 17,296
Net effect of dilutive
stock options - based on
the treasury method 28 0 55 9
Average shares for primary
earnings per share 18,285 17,316 18,002 17,305
Primary earnings (loss) per
common share $ (0.54) $ (0.76) $ (0.73) $ (2.02)
Venture Stores, Inc.
Computation of Earnings Per Share
(thousands, except per share data) Exhibit 11 (continued)
13 WEEKS ENDED 39 WEEKS ENDED
Oct. 26, Oct. 28, Oct. 26, Oct. 28,
1996 1995 1996 1995
FULLY DILUTED:
Net earnings (loss) $ (9,203) $ (12,580) $ (11,276) $ (33,113)
Less Preferred dividend (625) (625) (1,875) (1,875)
Net earnings (loss) avail.
to common shareowners $ (9,828) $ (13,205) $ (13,151) $ (34,988)
Average outstanding shares 18,257 17,316 17,947 17,296
Net effect of dilutive
stock options - based on
the treasury method 28 0 55 9
Average shares for
fully diluted
earnings per share 18,285 17,316 18,002 17,305
Fully diluted earnings
(loss) per common share $ (0.54) $ (0.76) $ (0.73) $ (2.02)
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
Condensed Balance Sheet as of October 26, 1996 and the Condensed Statement of
Earnings for the 39 weeks ended October 26, 1996 and is qualified in its
entirety by reference to such financial statements.
</LEGEND>
<CIK> 0000864968
<NAME> VENTURE STORES, INC.
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JAN-25-1997
<PERIOD-END> OCT-26-1996
<CASH> 11,656
<SECURITIES> 0
<RECEIVABLES> 16,058
<ALLOWANCES> 0
<INVENTORY> 407,202
<CURRENT-ASSETS> 459,871
<PP&E> 537,401
<DEPRECIATION> 169,137
<TOTAL-ASSETS> 834,710
<CURRENT-LIABILITIES> 368,673
<BONDS> 180,187
0
77
<COMMON> 18,263
<OTHER-SE> 211,482
<TOTAL-LIABILITY-AND-EQUITY> 834,710
<SALES> 1,010,896
<TOTAL-REVENUES> 1,10,896
<CGS> 753,060
<TOTAL-COSTS> 258,777
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 19,873
<INCOME-PRETAX> (20,814)
<INCOME-TAX> (9,538)
<INCOME-CONTINUING> (11,276)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (11,276)
<EPS-PRIMARY> (0.73)
<EPS-DILUTED> (0.73)
</TABLE>
