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 April 26, 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 1-10590
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 April 26, 1997:
Common stock, $1 par value - 18,268,961
PART I - FINANCIAL INFORMATION
Item 1 - Financial Statements
Venture Stores, Inc.
Condensed Statement of Earnings
(Unaudited)
(thousands, except per share data)
13 WEEKS ENDED
April 26, April 27,
1997 1996
Net Sales $ 314,438 $ 351,240
Costs and expenses:
Cost of merchandise sold 242,416 260,336
Selling, general, administrative
and other expenses 89,059 81,794
Net interest expense 7,781 6,112
Earnings (loss) before income taxes
and extraordinary item (24,818) 2,998
Income tax provision (benefit) (9,312) 1,261
Net earnings (loss) before extraordinary item (15,506) 1,737
Extraordinary item (net of tax) (2,402) 0
NET EARNINGS (LOSS) $ (17,908) $ 1,737
Dividends on preferred stock 625 625
NET EARNINGS (LOSS) AVAILABLE
TO COMMON SHAREHOLDERS $ (18,533) $ 1,112
Earnings (loss) per common share:
Before extraordinary item $ (0.88) $ 0.06
Extraordinary item (net of tax) (0.13) 0.00
EARNINGS (LOSS) PER COMMON SHARE $ (1.01) $ 0.06
DIVIDENDS DECLARED PER COMMON SHARE $ - $ -
AVERAGE COMMON SHARES OUTSTANDING 18,266 17,471
See accompanying Notes to Condensed Financial Statements.
Venture Stores, Inc.
Condensed Balance Sheet
(thousands)
(Unaudited) (Unaudited)
April 26, April 27, January 25,
1997 1996 1997
ASSETS
Current assets:
Cash and cash equivalents $ 14,487 $ 38,671 $ 10,178
Accounts receivable, net 12,937 13,679 14,013
Merchandise inventories 320,065 326,812 274,393
Income taxes receivable 946 4,836 12,187
Other current assets 8,113 16,235 7,167
Total current assets 356,548 400,233 317,938
Property and equipment, at cost 534,831 530,443 532,888
Accumulated depreciation (177,452) (152,996) (168,977)
Property and equipment, net 357,379 377,447 363,911
Deferred income taxes 6,992 - -
Other assets 10,269 5,315 5,811
TOTAL ASSETS $ 731,188 $ 782,995 $ 687,660
LIABILITIES AND SHAREHOLDERS'
INVESTMENT
Current liabilities:
Short-term debt $ 167,903 $ 112,000 $ 105,979
Current maturities of long-
term debt 4,341 4,093 4,371
Accounts payable 129,623 120,669 124,118
Accrued expenses 64,844 63,683 65,282
Total current liabilities 366,711 300,445 299,750
Long-term debt 178,031 182,373 179,059
Other liabilities 3,770 3,824 3,838
Deferred gain on sale/leaseback 18,710 20,148 19,070
Deferred income taxes - 32,854 4,012
Shareholders' investment 163,966 243,351 181,931
TOTAL LIABILITIES AND SHAREHOLDERS'
INVESTMENT $ 731,188 $ 782,995 $ 687,660
See accompanying Notes to Condensed Financial Statements.
Venture Stores, Inc.
Condensed Statement of Cash Flows
(Unaudited)
(dollars in thousands, except per share)
13 WEEKS ENDED
April 26, April 27,
1997 1996
OPERATING ACTIVITIES:
Net earnings (loss) $ (17,908) $ 1,737
Items not requiring the outlay of cash:
Depreciation and amortization 8,507 7,596
Deferred income tax and ITC (11,004) 14,358
Extraordinary item 3,893 0
Other (184) (194)
Working capital and other (28,941) (54,294)
Total operating activities (45,637) (30,797)
INVESTING ACTIVITIES:
Additions of property and equipment (2,325) (1,103)
Proceeds from sale of assets 807 2,617
Other 131 82
Total investing activities (1,387) 1,596
FINANCING ACTIVITIES:
Repayments of long-term debt (1,058) (968)
Proceeds from sale/leaseback 0 15,000
Short-term borrowings 61,924 (3,000)
Dividends (625) (625)
Prepayment penalty (1,688) 0
Financing costs (7,220) 0
Total financing activities 51,333 10,407
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 4,309 (18,794)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 10,178 57,465
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 14,487 $ 38,671
SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid (received) during the period:
Interest $ 4,285 $ 4,863
Income taxes $ (11,004) $ (23,989)
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.
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 25, 1997, and
the accompanying notes thereto included in the company's
1996 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 February 1997, the Financial Accounting Standards Board
issued Statement of Financial Accounting Standards (SFAS)
No. 128, "Earnings per Share." This statement simplifies
the standards for computing earnings per share previously
found in Accounting Principles Board Opinion No. 15 and
establishes new standards for computing and presenting
earnings per share. The company will adopt the new Statement
when required in the fourth quarter of 1997 and does not
expect the adoption to have a material impact on the
company's earnings per share.
4. In March 1997, the company established a stock option plan
(the "1997 Stock Option Plan") that authorizes the granting
of options to purchase common stock to certain associates of
the Company. A maximum of 350,000 shares of common stock
may be issued under the 1997 Stock Option Plan. 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 only after stated intervals of time, and are
conditioned upon continued active employment with the
company, except for periods following retirement, disability
or death. On March 6, 1997, 329,500 options were granted
under the plan.
5. On April 8, 1997, the company terminated its credit facility
with BankAmerica Business Credit and entered into an
agreement with BT Commercial Corporation for a secured
revolving credit facility (the "Revolving Credit Facility")
consisting of revolving credit loans and letters of credit
of up to $250 million in the aggregate, with a sublimit of
$125 million for letters of credit. The Revolving Credit
Facility is in effect until April 8, 2000, and is secured by
the inventory, equipment, and substantially all other assets
of the company, excluding leased or mortgaged real estate
and certain personal property under leases. The Revolving
Credit Facility requires the company to meet certain
quarterly financial covenants, including minimum net worth,
interest coverage and accounts payable to inventory ratios.
Under the terms of the Revolving Credit Facility, the
company is prohibited from paying dividends on its common
stock.
Interest on borrowings under the Revolving 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.
In connection with the termination of its previous credit
facility, the company recorded an extraordinary pre-tax
charge of $3.9 million ($2.4 million after tax, or $0.13 per
share) in the first quarter of 1997. The charge is
primarily for the write-off of unamortized deferred
financing costs and the prepayment penalties.
Item 2 - Management's Discussion and Analysis of Financial
Condition and Results of Operations
RESULTS OF OPERATIONS
First quarter 1997 sales were $314.4 million, down 10.5% from
$351.2 million during the same period in 1996. Comparable store
sales for the first quarter declined 11.1%. Comparable store
sales were negatively impacted by disruptions in the flow of
merchandise from certain of the company's vendors, cooler than
normal temperatures which negatively affected the sales of
softline and seasonal merchandise, and competitive store openings
in some of the company's markets since the first quarter of 1996.
The company's plans reflect a continuing comparable store sales
decline through at least the second quarter of 1997.
Loss per common share, before extraordinary item, for the first
quarter of 1997 was $0.88 compared with earnings per common share
of $0.06 for the comparable 1996 period. Net loss applicable to
common shareholders, before extraordinary item, was $16.1 million
for the first quarter of 1997, as compared with net earnings
available to common shareholders of $1.1 million for the
comparable 1996 period. During the first quarter of 1997, the
company recorded an extraordinary pre-tax charge of $3.9 million,
$2.4 million net of tax or $0.13 per share, primarily for the
write-off of unamortized deferred financing costs and prepayment
penalties related to the termination of the company's old credit
agreement. Including the extraordinary item, net loss per common
share was $1.01 for the first quarter of 1997 and net loss
applicable to common shareholders was $18.5 million. First
quarter of 1996 included a pre-tax gain from a real estate
transaction of $1.5 million, or $0.05 per share.
The components of the net earnings (loss) as a percent of sales
were as follows:
13 Weeks Ended
Apr. 26, Apr. 27,
1997 1996
Net sales 100.0% 100.0%
Cost of merchandise sold(before LIFO charge) 76.9 74.0
LIFO charge 0.2 0.1
Gross margin 22.9 25.9
Selling, general, administrative
and other expenses 28.3 23.3
Operating income (loss) (5.4) 2.6
Net interest expense 2.5 1.7
Earnings(loss) before income taxes and
extraordinary item (7.9) 0.9
Income tax provision (benefit) (3.0) 0.4
Net earnings (loss) before extraordinary item (4.9) 0.5
Extraordinary item (net of tax) (0.8) -
Net earnings (loss) (5.7)% 0.5%
Gross margin as a percent of sales decreased during the first
quarter of 1997 over the same period from the prior year
primarily due to a decrease in the sales of higher margin
softline items as a percentage of total sales. The change in the
sales mix resulted principally from the disruption in the flow of
merchandise from certain of the company's vendors and cooler than
normal temperatures. Margins were also negatively affected by
increased promotional activity and higher shortage.
The first quarter of 1997 included a LIFO charge of $0.5 million,
compared with a LIFO charge of $0.5 million in the first quarter
of 1996.
Selling, general, administrative and other ("SG&A") expenses
increased as a percent of sales in the first quarter of 1997
compared to the first quarter of 1996 due to the decline in sales
and an increase in SG&A expenses of $7.3 million. The first
quarter of 1996 benefited from the reduction of certain insurance
accruals no longer required, the reduction of certain previously
provided benefit accruals, the reduction of an over-accrual of
real estate taxes, and the reduction of recorded reserves on a
closed store. Another factor contributing to the increase in
SG&A expenses in the first quarter of 1997 compared to the first
quarter of 1996 is an increase in stock-based compensation
expense as a result of a new restricted stock program for key
executives implemented during the second quarter of 1996.
Net interest expense increased during the first quarter of 1997
compared to the same period in 1996 due to the increase in short-
term borrowings and a decrease in interest income.
FINANCIAL CONDITION
On April 8, 1997, the company terminated its credit facility with
BankAmerica Business Credit and entered into an agreement with BT
Commercial Corporation for a secured revolving credit facility
(the "Revolving Credit Facility") consisting of revolving credit
loans and letters of credit of up to $250 million in the
aggregate, with a sublimit of $125 million for letters of credit.
The Revolving Credit Facility is in effect until April 8, 2000,
and is secured by the inventory, equipment, and substantially all
other assets of the company, excluding leased or mortgaged real
estate and certain personal property under leases. The Revolving
Credit Facility requires the company to meet certain quarterly
financial covenants, including minimum net worth, interest
coverage and accounts payable to inventory ratios. Under the
terms of the Revolving Credit Facility, the company is prohibited
from paying dividends on its common stock. 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 Revolving 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 76.8% at April 26, 1997 compared
to 65.3% at the end of the first quarter of 1996 and 72.7% at
year-end 1996.
The decrease in long-term debt between first quarter 1996 and
first quarter 1997 resulted from regularly-scheduled maturities
of long-term debt and capital leases.
The increase in short-term debt reflects the company's greater
reliance on short-term debt to fund working capital as a result
of reduced sales and the net loss.
Non-current deferred income taxes were a liability of $32.9
million at April 27, 1996 and an asset of $7.0 million at April
25, 1997. The change in non-current deferred income taxes
resulted primarily from the creation of net operating loss
carryforwards during 1996 and the first quarter of 1997 and the
conclusion of an IRS examination that resulted in significant
capital recovery adjustments. The company has not recorded a
valuation allowance for deferred tax assets because it believes
that it is more likely than not that the deferred tax asset will
be realized. The decrease in income taxes receivable from year-
end 1996 resulted from an IRS refund received in the first
quarter of 1997.
The decrease in cash and equivalents between first quarter of
1996 and first quarter of 1997 is principally due to the net
losses in 1996 and the first quarter of 1997. The decrease in
other current assets from the first quarter of 1996 to the first
quarter of 1997 resulted from an $8.1 million decrease in prepaid
advertising expense. The increase in other assets is primarily
due to an increase in deferred financing costs related to the new
Revolving Credit Facility, net of the write-off of unamortized
deferred financing costs related to the previous credit
agreement.
The capital expenditure budget totals approximately $18.0 million
for 1997 and is expected to be used primarily to remodel existing
stores and for the ordinary repair and replacement of store and
distribution center assets. The company does not anticipate
opening any new family value stores in 1997.
In the first quarter of 1997, the company's sales and gross
margin were significantly below plan, partially as a result of
the disruptions in merchandise flow. In addition, although many
of the disruptions in merchandise flow have been corrected, many
of the factors which finance certain of the company's suppliers
are not providing adequate support for the sale of goods to the
company. The company believes that working capital and capital
expenditure requirements for the balance of 1997 will be funded
through a combination of cash flow from operations, borrowings
under the Revolving Credit Facility, and additional sources of
funding, which the company is currently pursuing, including,
among other things, the sale/leaseback of certain real estate and
certain fixtures and equipment. There can be no assurance,
however, that the company will be able to obtain such additional
financings or that, if obtained, such additional financings will
be adequate to meet the company's needs for additional capital.
RECENT ACCOUNTING PRONOUNCEMENTS
In February 1997, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards (SFAS) No. 128,
"Earnings per Share." This statement simplifies the standards
for computing earnings per share previously found in Accounting
Principles Board Opinion No. 15 and establishes new standards for
computing and presenting earnings per share. The company will
adopt the new Statement when required in the fourth quarter of
1997 and does not expect the adoption to have a material impact
on the company's earnings per share.
FORWARD LOOKING STATEMENTS
Certain matters discussed above, such as the company's
expectations with respect to sales for the remainder of 1997,
future ability to meet the financial covenants under the
Revolving Credit Facility, efforts to obtain additional sources
of funding, the realizability of deferred tax assets, and the
amounts of 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 and the institutions which finance those
providers, (iv) inventory imbalances caused by fluctuations in
consumer demand, (v)competition, including specifically price
competition, (vi) cost and availability of capital, (vii) the
results of the company's efforts to obtain additional sources of
funding, and (viii) the success of the company's repositioning
strategy.
PART II - OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
10.1 Venture Stores, Inc. Involuntary Severance Pay
Plan, as amended and restated effective February
1, 1996
10.2 Amendment to the Severance Agreement, effective
June 6, 1997, between the company and Robert N.
Wildrick
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 April 26, 1997.
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: June 10, 1997 By:\s\Eugene Caldwell
Eugene Caldwell
Senior Vice President
Chief Financial Officer
Exhibit Index
Exhibit
Number Description
10.1 Venture Stores, Inc. Involuntary Severance
Pay Plan, as amended and restated effective
February 1, 1996
10.2 Amendment to the Severance Agreement,
effective June 6, 1997, between the company
and Robert N. Wildrick
11 Computation of Earnings per Common Share
27 Financial Data Schedule
EXHIBIT 10.1
VENTURE STORES, INC.
INVOLUNTARY SEVERANCE PAY PLAN
(Amended and Restated Effective February 1, 1996)
TABLE OF CONTENTS
SECTION PAGE
ESTABLISHMENT OF THE PLAN. . . . . . . . . . . . . . . . . . . .1
PURPOSE OF THE PLAN. . . . . . . . . . . . . . . . . . . . . . .1
CONDITIONS FOR ELIGIBILITY . . . . . . . . . . . . . . . . . . .1
CONDITIONS OF INELIGIBILITY. . . . . . . . . . . . . . . . . . .2
SEVERANCE BENEFITS . . . . . . . . . . . . . . . . . . . . . . .3
REINSTATEMENT. . . . . . . . . . . . . . . . . . . . . . . . . .5
VENTURE EMPLOYMENT TERMINATION AGREEMENT . . . . . . . . . . . .5
PLAN ADMINISTRATION. . . . . . . . . . . . . . . . . . . . . . .6
PROCEDURE FOR MAKING AND APPEALING
CLAIMS FOR PLAN BENEFITS . . . . . . . . . . . . . . . . . . . .7
AMENDMENT/TERMINATION/VESTING. . . . . . . . . . . . . . . . . .8
NO ASSIGNMENT. . . . . . . . . . . . . . . . . . . . . . . . . .8
RECOVERY OF PAYMENTS MADE BY MISTAKE . . . . . . . . . . . . . .8
REPRESENTATIONS CONTRARY TO THE PLAN . . . . . . . . . . . . . .8
NO EMPLOYMENT RIGHTS . . . . . . . . . . . . . . . . . . . . . .9
PLAN FUNDING . . . . . . . . . . . . . . . . . . . . . . . . . .9
APPLICABLE LAW . . . . . . . . . . . . . . . . . . . . . . . . .9
SEVERABILITY . . . . . . . . . . . . . . . . . . . . . . . . . .9
PLAN YEAR. . . . . . . . . . . . . . . . . . . . . . . . . . . .9
MISCELLANEOUS PROVISIONS . . . . . . . . . . . . . . . . . . . .9
VENTURE STORES, INC.
INVOLUNTARY SEVERANCE PAY PLAN
ESTABLISHMENT OF THE PLAN
VENTURE STORES, INC. (hereinafter "Venture") hereby adopts the
VENTURE STORES, INC. INVOLUNTARY SEVERANCE PAY PLAN (the "Plan"),
amended and effective February 1, 1996, for the benefit of
certain exempt and non-exempt employees of Venture, as described
below. Employees who satisfy the conditions for eligibility are
referred to herein as "Associates." The Plan supersedes any and
all prior formal and informal severance plans, programs or
policies covering Associates, including the Venture Stores, Inc.
Standard Practice Instructions No. 3-24 for Exempt Associates,
rewritten as of July 1995 and Venture Stores, Inc. Standard
Practice Instructions No. 3-24.1 for Non-Exempt Associates,
rewritten as of July 1995.
The Plan is an unfunded welfare benefit plan for purposes of the
Employee Retirement Income Security Act of 1974, as amended
("ERISA"), and a severance pay plan within the meaning of the
United States Department of Labor Regulation Section 2510.3-2(b).
PURPOSE OF THE PLAN
The purpose of the Plan is to provide severance pay to an
Associate in the event that his or her employment is
involuntarily terminated by Venture due to (i) lack of work, (ii)
reorganization of work, or (iii) reduction in the workforce.
Venture may, in its sole discretion, provide severance pay under
this Plan to an Associate who is unable to perform the duties and
responsibilities of his or her position.
CONDITIONS FOR ELIGIBILITY
Generally. Except as provided below (under "Conditions of
Ineligibility") the Plan shall apply to all regular "full-time"
and "part-time" exempt and non-exempt employees of Venture. Such
exempt and non-exempt employees shall be referred to herein as
"Associates." Notwithstanding the foregoing, the Plan does not
cover an Associate who (a) is covered by a written employment
agreement or severance agreement that contains a severance pay
provision or he or she will receive severance pay or severance
benefits under a separate arrangement with Venture; (b) is
classified as "temporary", "extra" or "seasonal" provided,
however, if an Associate is classified as an "extra" and his or
her employment is terminated as part of a complete store closing,
such Associate will be eligible for severance pay; (c) is covered
by a collective bargaining agreement (unless such agreement
provides for his or her coverage under the Plan), or (d) receives
severance pay or severance benefits from Venture under any other
policy, program, plan, contract or arrangement.
Full-Time/Part-Time.
(i) Exempt Associates. For purposes of the Plan, a "full-
time" exempt Associate is one who is regularly
scheduled to work 40 hours or more per week. A "part-
time" exempt Associate is one who is regularly
scheduled to work less than 5 full business days per
week.
(ii) Non-Exempt Associates. For purposes of the Plan, a
"full-time" non-exempt Associate is one who is
regularly scheduled to work 37 hours or more per week.
A "part-time" non-exempt Associate is one who is
regularly scheduled to work at least 12 hours, but less
than 37 hours, per week.
Termination Date. Venture shall determine, in its sole
discretion, when an Associate's termination shall occur.
Consideration may be given to the health and financial welfare of
an Associate in determining the termination date. The Plan
Administrator shall notify each Associate in writing of the date
his or her employment will terminate and of his or her
eligibility to participate in the Plan.
CONDITIONS OF INELIGIBILITY
An Associate who otherwise satisfies the Conditions for
Eligibility above shall not be eligible for severance pay under
the Plan if:
(a) he or she ceases to be an Associate;
(b) his or her employment with Venture terminates by reason
of death or discharge for "cause" (as defined below),
including but not limited to, an Associate's
resignation in lieu of discharge for cause. If an
Associate's employment terminates as a result of
discharge for cause, severance benefits, if any, may be
provided in the sole discretion of Venture;
(c) his or her employment with Venture terminates through
retirement, voluntary resignation, job abandonment or
failure to report for work;
(d) his or her employment with Venture is involuntarily
terminated after refusing a comparable position at the
same or some other location of Venture that is located
within the same metropolitan area of the Venture
location at which he or she was employed prior to his
or her termination, and the Associate's base pay in
such other position is no more than 5% less than his or
her base pay immediately prior to the date he or she is
offered a comparable position at the same pay grade;
(e) he or she is employed in a Venture operation or
facility that is sold, leased or otherwise transferred.
In each such situation, a severance arrangement, if
any, may be provided in the sole discretion of Venture;
(f) he or she is found by Venture, in its sole discretion
and for any reason, to be unable to perform the duties
and responsibilities of his or her position;
(g) after being notified of his or her termination of
employment, including the termination date, the
Associate leaves employment with Venture prior to the
date authorized by Venture;
(h) his or her employment with Venture is terminated under
the terms of another group severance plan or program
sponsored by Venture;
(i) the Plan is terminated; or
(j) he or she fails to execute and return a valid Venture
Employment Termination Agreement to the Plan
Administrator on a timely basis.
For purposes of the Plan, "cause" shall exist if the Associate
engages in activity which is detrimental to the interests of
Venture. The Plan Administrator shall determine, in its sole
discretion, whether an Associate is terminated for cause.
Examples of circumstances which may give rise to a termination
for cause include, but are not limited to, dishonesty,
insubordination, blatant discourtesy or insensitivity to
customers, possession (or reporting to work under the influence)
of alcoholic beverages and/or non-prescription drugs, possession
of a weapon, harm or threat of harm to another person, fighting,
destruction of property, and other violations of Venture
policies, rules or regulations, including those set forth in the
Associate handbook.
SEVERANCE BENEFITS
Base Pay. As consideration for providing the Plan Administrator
with a valid Venture Employment Termination Agreement in a form
acceptable to the Plan Administrator, an Associate will be
eligible to receive severance pay in accordance with the table
set forth below:
(i) Exempt Associate
Years of Continuous Service on
His or Her Last Day Worked Weeks of Severance Pay
Less than 4 4
At least 4 but less than 6 6
At least 6 but less than 8 8
At least 8 but less than 10 10
At least 10 12
For purposes of the Plan, "weeks of severance pay" for an exempt
Associate shall be based on the exempt Associate's regular weekly
base salary as of his or her last day worked; an exempt
Associate's "regular weekly base salary" means his or her annual
salary divided by 52 weeks; an exempt Associate's "last day
worked" shall be the last day the exempt Associate is actively
employed by Venture and does not include any vested, unpaid
vacation or personal holidays; and a "year of continuous service"
is each full year of continuous employment (including authorized
leaves of absence and layoffs) with Venture and The May
Department Store Company (prior to the spinoff), measured from
the exempt Associate's last day of hire in accordance with
Venture's personnel records.
(ii) Non-Exempt Associate
Years of Continuous Service on
His or Her Last Day Worked Weeks of Severance Pay
Less than 4 2
At least 4 but less than 6 3
At least 6 but less than 8 4
At least 8 but less than 10 5
At least 10 6
For purposes of the Plan, "weeks of severance pay" shall be based
on the non-exempt Associate's regular weekly base pay as of his
or her last day worked; a non-exempt Associate's "regular weekly
base pay" means the non-exempt Associate's average weekly hours
from the last 4 full calendar quarters (not to exceed 40 hours
per week) times his or her hourly rate of pay; a non-exempt
Associate's "last day worked" shall be the last day the non-
exempt Associate is actively employed by Venture and does not
include any vested, unpaid vacation or personal holidays; and a
"year of continuous service" is each full year of continuous
employment (including authorized leaves of absence and layoffs)
with Venture and The May Department Store Company (prior to the
spinoff), measured from the non-exempt Associate's last day of
hire in accordance with Venture's personnel records.
Supplemental Benefits. Venture may, in its sole discretion,
award benefits in excess of those provided above. Any such award
will be made on an individual basis and shall not have any effect
on future determinations of eligibility and/or benefit amounts
for other Associates under this Plan.
Form of Payment. Severance pay will be distributed in a lump sum
not later than 30 days following the date the Associate has
timely submitted to the Plan Administrator an executed Venture
Employment Termination Agreement, provided that the seven (7) day
revocation period for Venture Employment Termination Agreements
has elapsed and the Associate has not exercised his or her right
to revoke. The Venture Employment Termination Agreement
procedures are described below.
The Plan Administrator reserves the right in its sole discretion
to pay severance pay in installments. Installment payments, if
any, shall begin not later than 30 days following the date the
Associate has timely submitted to the Plan Administrator an
executed Venture Employment Termination Agreement, provided that
the seven (7) day revocation period for Venture Employment
Termination Agreements has elapsed and the Associate has not
exercised his or her right to revoke.
Tax Consequences. Severance pay is ordinary income to an
Associate. All legally-required taxes shall be deducted from
such pay. If an Associate dies on or after his or her last day
worked but before receiving complete payment of his or her
severance pay, the remaining amount of severance pay shall be
paid to the Associate's estate.
REINSTATEMENT
If, prior to receiving severance pay but after submitting to the
Plan Administrator an executed Venture Employment Termination
Agreement an Associate returns to Venture on a temporary
employment assignment, severance pay shall cease during the
period of temporary employment and resume when the assignment
ends. If, prior to receiving severance pay but after submitting
to the Plan Administrator an executed Venture Employment
Termination Agreement an Associate is reemployed by Venture other
than on a temporary basis, severance pay and supplemental
benefits, if any, shall cease as of the date his or her
reemployment begins. If, while receiving severance pay in
installments under the Plan, an Associate returns to Venture on a
temporary employment assignment, the severance pay shall cease
during the period of temporary employment and resume when the
assignment ends. If an Associate who is receiving severance pay
under the Plan in installments is reemployed by Venture other
than on a temporary basis, the severance pay and supplemental
benefits, if any, shall cease as of the date his or her
reemployment begins.
VENTURE EMPLOYMENT TERMINATION AGREEMENT
Submission. In order to receive severance pay under this Plan,
an Associate must execute a valid Venture Employment Termination
Agreement ("Agreement") in a form satisfactory to Venture and
submit the executed Agreement to the Plan Administrator no later
than 45 days after his or her last day worked or 45 days after he
or she receives the Agreement, whichever is later. In no event
may an Associate submit an executed Agreement before his or her
last day worked. The Plan Administrator shall furnish an
Agreement to each Associate.
Revocation. An Associate may revoke his or her signed Agreement
within seven (7) days of the date he or she signed it. A
revocation must be made in writing and must be received by the
Plan Administrator within such seven (7) day period. An
Associate who timely revokes his or her Agreement shall not be
eligible to receive any severance pay under the Plan. An
Associate who timely submits a signed Agreement and who does not
exercise his or her right of revocation shall be eligible to
receive severance pay under the Plan. Associates are encouraged
to contact their personal attorney at their own expense to review
the Agreement if they so desire.
PLAN ADMINISTRATION
Powers. Venture shall serve as the "Plan Administrator" and a
"named fiduciary," as those terms are defined in ERISA. Except
as provided below (under "Special Authorization Powers"), the
Plan Administrator shall have the discretionary authority to
determine eligibility for Plan benefits and to construe the terms
of the Plan, including the discretionary authority to make all
factual determinations. All decisions by the Plan Administrator
shall be final, conclusive and binding upon all persons to the
extent permitted by law. A court will apply an "abuse of
discretion" or "arbitrary and capricious" standard of review to
the Plan Administrator's decision. The Plan Administrator may
delegate to other persons responsibility for performing certain
of its duties under the terms of the Plan and may seek such
expert advice as the Plan Administrator deems reasonably
necessary with respect to the Plan. The Plan Administrator shall
be entitled to rely upon the information and advice furnished by
such delegates and experts, unless the Plan Administrator
actually knows such information and advice to be inaccurate or
unlawful.
Special Authorization Powers. Certain members of senior
management of Venture shall be responsible for authorizing
severance pay to various classes of Associates under the Plan.
The Associate classifications and responsible management
personnel are as follows:
(i) Exempt Associate
Classification Responsible Officer
Store and Distribution Center Human Resources Director,
Exempt Associates, Stores
Pay Grades 1-7
Corporate Office Exempt Human Resources Director,
Associates, Pay Grades 1-7 Corporate Office
All Exempt Associates, Sr. Vice President,
Pay Grade 8 and above Human Resources
(ii) Non-Exempt Associate
Classification Responsible Officer
Store and Distribution Human Resources Director,
Center Non-Exempt Stores
Associates,
Corporate Office Non- Human Resources Director,
Exempt Associates Corporate Office
The Plan Administrator shall establish and maintain a reasonable
claims procedure, including a procedure to allow Associates to
appeal denied claims. This claims procedure is described below.
PROCEDURE FOR MAKING AND
APPEALING CLAIMS FOR PLAN BENEFITS
Filing and Review. It is not necessary that Associates apply for
benefits under the Plan. However, if an Associate wishes to file
a claim for benefits, such claim must be in writing and filed
with the Plan Administrator. Within 90 days after receiving a
claim (or within 180 days if special circumstances require an
extension of time and written notice was provided to the
Associate before the expiration of the initial 90-day period),
the Plan Administrator will:
(a) either accept or deny the claim completely or
partially; and
(b) notify the Associate of acceptance or denial of the
claim.
Denial. If the claim is completely or partially denied, the Plan
Administrator will furnish a written notice to the Associate
containing the following information:
(a) specific reasons for the denial;
(b) specific references to the Plan provisions on which any
denial is based;
(c) a description of any additional material or information
that would support the claim; and
(d) an explanation of the Plan's appeal procedures.
Appeal. An Associate may appeal the full or partial denial of
the claim and have the Plan Administrator reconsider the
decision. An Associate or his or her authorized representative
has the right to:
(a) request an appeal by written request to the Plan
administrator not later than 60 days after receipt of
notice from the Plan Administrator denying his or her
claim;
(b) review and obtain copies of pertinent Plan documents;
and
(c) submit issues and comments regarding the claim in
writing to the Plan Administrator.
Decision on Appeal. The Plan Administrator will make a decision
with respect to such appeal within 60 days after receiving the
written request for the appeal. (This 60-day period may be
extended for an additional 60 days if special circumstances
require an extension of time and written notice is provided the
Associate or his or her authorized representative before the
extension commences). The Associate or his or her authorized
representative will be advised of the Plan Administrator's
decision and the specific reference to Plan provisions upon which
the decision on the appeal is based.
Exhaustion of Claims Procedure Required. In no event shall an
Associate, or any other person, be entitled to challenge a
decision of the Plan Administrator in court or in any other
administrative proceeding unless and until the claim and appeals
procedures established under the Plan have been complied with and
exhausted.
AMENDMENT/TERMINATION/VESTING
Associates do not have any vested right to severance pay under
the Plan and Venture reserves the right in its sole discretion to
amend or terminate the Plan in writing at any time. Any
amendment or termination of the Plan shall be approved by the
Board of Directors of Venture and evidenced by an officer of
Venture.
NO ASSIGNMENT
Severance pay under the Plan shall not be subject to
anticipation, alienation, pledge, sale, transfer, assignment,
garnishment, attachment, execution, encumbrance, levy, lien, or
charge, and any attempt to cause such severance pay to be so
subjected shall not be recognized, except to the extent required
by law.
RECOVERY OF PAYMENTS MADE BY MISTAKE
An Associate shall be required to return to Venture any severance
pay, or portion thereof, made by a mistake of fact or law.
REPRESENTATIONS CONTRARY TO THE PLAN
No Associate, officer, or director of Venture has the authority
to alter, vary, or modify the terms of the Plan except by means
of an authorized written amendment to the Plan. No verbal or
written representations contrary to the terms of the Plan and its
written amendments shall be binding upon the Plan, the Plan
Administrator, or Venture.
NO EMPLOYMENT RIGHTS
The Plan shall not confer employment rights upon any person. No
person shall be entitled, by virtue of the Plan, to remain in the
employ of Venture and nothing in the Plan shall restrict the
right of Venture to terminate the employment of any Associate at
any time, with or without cause, and with or without notice.
PLAN FUNDING
No Associate shall acquire by reason of the Plan any right in or
title to any assets, funds, or property of Venture. Any
severance pay that becomes payable under the Plan is an unfunded
obligation of Venture and shall be paid from the general assets
of Venture. No employee, officer, director or agent of Venture
guarantees in any manner the payment of Plan severance pay.
APPLICABLE LAW
The Plan shall be governed and construed in accordance with ERISA
and in the event that any reference shall be made to State law,
the laws of the State of Missouri shall apply.
SEVERABILITY
If any provision of the Plan is found, held or deemed by a court
of competent jurisdiction to be void, unlawful or unenforceable
under any applicable statute or other controlling law, the
remainder of the Plan shall continue in full force and effect.
PLAN YEAR
The ERISA plan year of the Plan shall be the twelve month period
commencing on February 1 of each year.
MISCELLANEOUS PROVISIONS
All Venture property (i.e., keys, credit cards, documents and
records, identification cards, equipment, beepers, etc.) must be
returned by an Associate and all monies due Venture pursuant to
any Venture policy must be paid to Venture in order for such
Associate to receive any severance pay under the Plan.
All pay and other benefits (except Plan severance pay) payable to
an Associate as of his or her last day worked with Venture
according to the established policies, plans, and procedures of
Venture shall be paid in accordance with the terms of those
established policies, plans, and procedures. In addition, any
benefit continuation or conversion rights which an Associate
has as of his or her last day worked with Venture according to
the established policies, plans, and procedures of Venture shall
be made available to him or her.
VENTURE STORES, INC.
By/s/ Russell Solt
1065475.8
EXHIBIT 10.2
AMENDMENT TO LETTER AGREEMENT
This AMENDMENT TO LETTER AGREEMENT (the "Amendment") is made
and entered into effective as of June 6, 1997 by and between
Venture Stores, Inc. ("Venture") and Robert N. Wildrick
("Executive").
WITNESSETH, that:
WHEREAS, the parties entered into a written letter agreement
dated April 17, 1995 (the "Letter Agreement");
WHEREAS, the parties desire to amend the Letter Agreement;
NOW, THEREFORE, in consideration of the foregoing premises
and the mutual promises and agreements hereinafter set forth, it
is agreed between Venture and Executive as follows:
1. The first sentence of Section 3(i) of the Letter
Agreement shall be deleted and replaced in its entirety with the
following:
(i) General. If any of the events described in Section 2
constituting a change in control of the Company shall have
occurred, you shall be entitled to the benefits provided in
Section 4(iii) upon the subsequent termination of your
employment during the term of this Agreement unless such
termination is (a) because of your death or Disability or
(b) by the Company for Cause.
2. Section 4(ii) of the Letter Agreement shall be deleted
and replaced in its entirety with the following:
(ii) If your employment shall be terminated by the Company
for Cause, the Company shall pay you at your full base
salary through the Date of Termination at the rate in effect
at the time Notice of Termination is given, plus all other
amounts to which you are entitled under any compensation
plan of the Company at the time such payments are due, and
the Company shall have no further obligations to you under
this Agreement.
3. The introductory clause of Section 4(iii) of the Letter
Agreement (prior to clause (a) thereof) shall be deleted and
replaced in its entirety with the following:
(iii) If your employment by the Company should be terminated
by the Company other than for Cause or your death or
Disability or if you should terminate your employment for
any reason whatsoever, you shall be entitled to the benefits
provided below:
4. Except as specifically modified by this Amendment, all
of the provisions of the Letter Agreement remain in full force
and effect as set forth in the Letter Agreement.
IN WITNESS WHEREOF, this Amendment has been executed by the
parties hereto and shall be effective as of the date first above
written.
VENTURE STORES, INC.
By: /s/Russell Solt
Name: Russell Solt
Title: Executive VP -
Finance & Admin.
/s/Robert N. Wildrick
Robert N. Wildrick
Venture Stores, Inc.
Computation of Earnings Per Share
(thousands, except per share data) EXHIBIT 11
13 WEEKS ENDED
April 26, April 27,
1997 1996
Net earnings (loss) before extraordinary item $ (15,506) $ 1,737
Extraordinary item (net of tax) (2,402) -
Net earnings (loss) $ (17,908) $ 1,737
Less Preferred dividend (625) (625)
Net earnings (loss) available
to common shareholders $ (18,533) $ 1,112
Average outstanding shares 18,266 17,471
Earnings (loss) per common share:
Before extraordinary item $ (0.88) $ 0.06
Extraordinary item (net of tax) (0.13) -
Earnings (loss) per common share $ (1.01) $ 0.06
PRIMARY:
Net earnings (loss) before extraordinary item $ (15,506) $ 1,737
Extraordinary item (net of tax) (2,402) -
Net earnings (loss) $ (17,908) $ 1,737
Less Preferred dividend (625) (625)
Net earnings (loss) available
to common shareholders $ (18,533) $ 1,112
Average outstanding shares 18,266 17,471
Net effect of dilutive
stock options - based on
the treasury method - 67
Average shares for primary
earnings per share 18,266 17,538
Primary earnings (loss) per common share:
Before extraordinary item $ (0.88) $ 0.06
Extraordinary item (net of tax) (0.13) -
Earnings (loss) per common share $ (1.01) $ 0.06
FULLY DILUTED:
Net earnings (loss) before extraordinary item $ (15,506) $ 1,737
Extraordinary item (net of tax) (2,402) -
Net earnings (loss) $ (17,908) $ 1,737
Less Preferred dividend (625) (625)
Net earnings (loss) available
to common shareholders $ (18,533) $ 1,112
Average outstanding shares 18,266 17,471
Net effect of dilutive
stock options - based on
the treasury method - 73
Average shares for
fully diluted
earnings per share 18,266 17,544
Fully diluted earnings (loss) per common share:
Before extraordinary item $ (0.88) $ 0.06
Extraordinary item (net of tax) (0.13) -
Earnings (loss) per common share $ (1.01) $ 0.06
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
Condensed Balance Sheet as of April 26, 1997 and the Condensed Statement of
Earnings for the 13 weeks ended April 26, 1997 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> 3-MOS
<FISCAL-YEAR-END> JAN-31-1998
<PERIOD-END> APR-26-1997
<CASH> 14,487
<SECURITIES> 0
<RECEIVABLES> 12,937
<ALLOWANCES> 0
<INVENTORY> 320,065
<CURRENT-ASSETS> 356,548
<PP&E> 534,831
<DEPRECIATION> 177,452
<TOTAL-ASSETS> 731,188
<CURRENT-LIABILITIES> 366,711
<BONDS> 178,031
0
77
<COMMON> 18,269
<OTHER-SE> 145,260
<TOTAL-LIABILITY-AND-EQUITY> 731,188
<SALES> 314,438
<TOTAL-REVENUES> 314,438
<CGS> 242,416
<TOTAL-COSTS> 89,059
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 7,781
<INCOME-PRETAX> (24,818)
<INCOME-TAX> (9,312)
<INCOME-CONTINUING> (15,506)
<DISCONTINUED> 0
<EXTRAORDINARY> (2,402)
<CHANGES> 0
<NET-INCOME> (17,908)
<EPS-PRIMARY> (1.01)
<EPS-DILUTED> (1.01)
</TABLE>
