<PAGE> 1
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended October 31, 1998
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 1-10767
-------
VALUE CITY DEPARTMENT STORES, INC.
- -------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Ohio 31-1322832
- ----------------------------------- ------------------------------------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
3241 Westerville Road, Columbus, Ohio 43224
- -------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (614) 471-4722
--------------
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 the latest
practicable date.
Class Outstanding at December 4, 1998
- ------------------------------------ -----------------------------------
Common Stock, Without Par Value 32,285,967 Shares
<PAGE> 2
VALUE CITY DEPARTMENT STORES, INC.
TABLE OF CONTENTS
================================================================================
<TABLE>
<CAPTION>
Page No.
--------
<S> <C>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheets
October 31, 1998 and August 1, 1998 3
Consolidated Statements of Income
Three months ended October 31, 1998
and November 1, 1997 4
Consolidated Statements of Cash Flows
Three months ended October 31, 1998
and November 1, 1997 5
Notes to the Consolidated Financial Statements 6
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 7
Item 3. Quantitative and Qualitative Disclosures about Market Risk N/A
PART II. OTHER INFORMATION
Item 1. Legal Proceedings N/A
Item 2. Changes in Securities N/A
Item 3. Defaults Upon Senior Securities N/A
Item 4. Submission of Matters to a Vote of Security Holders 11
Item 5. Other Information N/A
Signatures 12
Item 6. Exhibits and Reports on Form 8-K
Part A: Exhibit 27 Financial Data Schedule for First Quarter Form 10-Q 13
Part B: Reports on Form 8-K N/A
</TABLE>
page 2
<PAGE> 3
VALUE CITY DEPARTMENT STORES, INC.
PART 1. - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT SHARE AMOUNTS)
(UNAUDITED)
================================================================================
<TABLE>
<CAPTION>
OCTOBER 31, AUGUST 1,
1998 1998
-------------- ---------
ASSETS
<S> <C> <C>
Current assets:
Cash and equivalents $ 11,332 $ 32,802
Accounts receivable, net 5,722 5,458
Receivables from affiliates 721 636
Inventories 376,394 373,175
Prepaid expenses and other assets 7,225 8,192
Deferred income taxes 17,058 17,687
--------- ---------
Total current assets 418,452 437,950
Property and equipment, at cost:
Furniture, fixtures and equipment 168,869 165,261
Leasehold improvements 125,550 122,011
Land and building 1,017 1,001
Capital leases 15,276 15,276
--------- ---------
310,712 303,549
Accumulated depreciation and amortization (140,491) (133,707)
--------- ---------
Property and equipment, net 170,221 169,842
Investment in joint venture 7,148 8,260
Goodwill and tradenames, net 45,918 46,717
Other assets 20,540 20,288
--------- ---------
Total assets $ 662,279 $ 683,057
========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 113,513 $ 133,539
Accounts payable to affiliates 3,525 7,235
Accrued expenses:
Compensation 8,574 13,524
Taxes 11,297 17,646
Other 30,867 28,030
Current maturities of long-term obligations 41,044 32,224
--------- ---------
Total current liabilities 208,820 232,198
Long-term obligations, net of current maturities 165,618 165,648
Deferred income taxes and other noncurrent liabilities 2,630 4,460
Shareholders' equity:
Common shares, without par value; 80,000,000 authorized;
issued, including treasury shares, 32,651,667
shares and 32,619,767 shares, respectively 113,009 112,749
Contributed capital 12,213 12,097
Retained earnings 163,832 159,814
Deferred compensation expense, net (1,014) (1,080)
Treasury shares at cost, 368,600 shares (2,829) (2,829)
--------- ---------
Total shareholders' equity 285,211 280,751
--------- ---------
Total liabilities and shareholders' equity $ 662,279 $ 683,057
========= =========
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
page 3
<PAGE> 4
VALUE CITY DEPARTMENT STORES, INC.
CONSOLIDATED STATEMENTS OF INCOME
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
================================================================================
<TABLE>
<CAPTION>
THREE MONTHS ENDED
------------------------------
OCTOBER 31, NOVEMBER 1,
1998 1997
------------------------------
<S> <C> <C>
Total sales $ 375,982 $ 324,783
Less licensed departments sales (19,227) (60,398)
--------- ---------
Net owned sales 356,755 264,385
Cost of sales (219,575) (166,955)
--------- ---------
Gross profit 137,180 97,430
Selling, general and administrative expenses (129,172) (97,764)
License fees from affiliates,
and other operating income 3,417 7,089
--------- ---------
Operating profit 11,425 6,755
Interest expense, net (3,557) (1,049)
Other income, net 3 852
--------- ---------
Income before equity in loss of
joint venture and provision for income taxes 7,871 6,558
Equity in loss of joint venture (1,113) (1,109)
--------- ---------
Income before provision
for income taxes 6,758 5,449
Provision for income taxes (2,740) (2,171)
--------- ---------
Net income $ 4,018 $ 3,278
========= =========
Basic and diluted earnings per share $ 0.12 $ 0.10
========= =========
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
page 4
<PAGE> 5
VALUE CITY DEPARTMENT STORES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
(UNAUDITED)
================================================================================
<TABLE>
<CAPTION>
THREE MONTHS ENDED
----------------------------
OCTOBER 31, NOVEMBER 1,
1998 1997
----------------------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 4,018 $ 3,278
Adjustments to reconcile net income to net cash
provided by (used in) operating activities:
Depreciation and amortization 8,909 7,024
Deferred income taxes and other noncurrent liabilities (1,201) (815)
Loss of joint venture 1,113 1,109
Gain on disposal of assets (3) (852)
Change in working capital, assets and liabilities:
Receivables (349) (907)
Inventories (3,219) (5,727)
Prepaid expenses and other assets 212 6,902
Accounts payable (23,736) 6,123
Accrued expenses (7,859) (3,642)
-------- --------
Net cash provided by (used in) operating activities (22,115) 12,493
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures (7,745) (3,109)
Proceeds from sale of assets 8 21,405
Investment in joint venture -- (9,637)
Other assets (668) (408)
Notes receivable -- 1,906
-------- --------
Net cash provided by (used in) investing activities (8,405) 10,157
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net borrowings (payments) under revolving credit facilities 8,820 (12,000)
Principal payments of long-term obligations (30) (69)
Net proceeds from issuance of common shares 260 11
-------- --------
Net cash provided by (used in) financing activities 9,050 (12,058)
-------- --------
Net increase (decrease) in cash and equivalents (21,470) 10,592
Cash and equivalents, beginning of period 32,802 11,614
-------- --------
Cash and equivalents, end of period $ 11,332 $ 22,206
======== ========
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
page 5
<PAGE> 6
VALUE CITY DEPARTMENT STORES, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED OCTOBER 31, 1998 AND NOVEMBER 1, 1997
(UNAUDITED)
================================================================================
1. BASIS OF PRESENTATION
The accompanying consolidated financial statements include the accounts of
Value City Department Stores, Inc. and its wholly owned subsidiaries. These
entities are herein referred to collectively as the "Company." The Company
operates a chain of full-line, off-price department stores, principally
under the name "Value City," as well as off-price shoe stores, principally
under the name "DSW Shoe Warehouse."
The balance sheet for August 1, 1998 is condensed information taken from
the audited financial statements. The interim financial statements are
unaudited and are presented pursuant to the rules and regulations of the
Securities and Exchange Commission. Accordingly, the consolidated financial
statements should be read in conjunction with the financial statement
disclosures contained in the Company's 1998 Annual Report. In the opinion
of management, the accompanying consolidated financial statements reflect
all adjustments necessary (which are of a normal recurring nature) to
present fairly the financial position and results of operations and cash
flows for the interim periods presented, but are not necessarily indicative
of the results of operations for a full fiscal year.
2. ACQUISITIONS
Effective May 3, 1998, the Company purchased 99.9% of the common stock of
Shonac Corporation ("Shonac") from Nacht Management, Inc. and Schottenstein
Stores Corporation ("SSC"). SSC owns approximately 56.3% of the Company's
outstanding common shares. The Company also acquired the store operations
of Valley Fair Corporation ("Valley Fair") from SSC. Shonac has operated,
as licensee, the shoe departments in the Company's department stores since
Shonac's inception in 1969. Shonac also operates a chain of retail shoe
outlets located throughout the United States, principally under the name
DSW Shoe Warehouse. Valley Fair operated two department stores located in
Irvington and Little Ferry, New Jersey. The Company had been a licensee of
certain departments in these two stores for 18 years. The acquisitions have
been accounted for using the purchase method of accounting.
page 6
<PAGE> 7
VALUE CITY DEPARTMENT STORES, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
================================================================================
THREE MONTHS ENDED OCTOBER 31, 1998 COMPARED TO THREE MONTHS ENDED NOVEMBER 1,
1997
Total sales, which include licensed departments sales, increased $51.2 million
from $324.8 million to $376.0 million. Consolidated net owned sales for the
department stores ("Value City") increased from $264.4 million to $265.4
million, an increase of $1.0 million, or 0.4%, net of $2.8 million of sales from
stores closed during fiscal 1998. Value City's comparable store owned sales
increased 0.5%, or $1.3 million. Shonac Corporation ("Shonac"), a wholly owned
subsidiary of the Company, contributed net owned sales of $91.4 million, with a
comparable store sales decrease of 1.1%. DSW Shoe Warehouse, a wholly owned
subsidiary of Shonac, achieved sales of $48.1 million with a 3.8% comparable
store sales increase. On a comparable store basis, Value City's non-apparel
owned sales increased 6.6% while apparel sales decreased 1.3% for the quarter.
Consolidated gross profit increased $39.8 million from $97.4 million to $137.2
million and increased as a percentage of owned sales from 36.9% to 38.4%. The
acquisition of Shonac contributed $37.9 million. Value City's gross profit for
the quarter increased $1.8 million, or 1.9% from $97.4 million to $99.3 million,
and increased as a percentage of owned sales from 36.9% to 37.4% due to
reductions in markdowns and improved initial markup.
Selling, general and administrative expenses ("SG&A") increased $31.4 million
from $97.8 million to $129.2 million, but decreased as a percentage of owned
sales from 37.0% to 36.2%, a reduction of 0.8%, due primarily to the leveraging
effect of the Shonac acquisition. Shonac incurred SG&A of $29.9 million, or
32.7% of their owned sales. Value City's SG&A increased $5.8 million and
increased as a percentage of owned sales from 37.0% to 39.0%. This is primarily
attributable to increases in distribution, advertising, personnel, new stores,
net of closed stores and the addition of Valley Fair's operations (which were
offset by a similar amount of license fee income.
Depreciation and amortization expense increased from $7.0 million to $8.9
million but decreased as a percentage of owned sales from 2.7% to 2.5%.
Based upon its experience, the Company estimates the average cost of opening a
new department store to range from approximately $5.0 million to $6.5 million
and the cost of opening a new shoe store to range from approximately $1.0
million to $2.0 million including leasehold improvements, fixtures, inventory,
pre-opening expenses and other costs. Preparations for opening a department
store generally take between eight and twelve weeks, and preparations for a shoe
store generally take between eight to ten weeks. Through August 1, 1998, the
Company charged pre-opening expenses to operations ratably over the first twelve
months of store operations. Effective in fiscal 1999, pre-opening costs will be
expensed as incurred in accordance with Accounting Standards Executive Committee
Statement of Position 98-5. It has been the Company's experience that new stores
generally achieve profitability and contribute to net income after the first
full year of operations. Two department stores opened less than twelve months as
of the beginning of the current fiscal year had a pre-tax net operating loss of
$0.7 million for this year, including $0.8 million of pre-opening expense. Nine
department stores opened less than twelve months during fiscal 1997 had pre-tax
operating losses of $1.7 million in 1997, including $0.9 million of pre-opening
expense amortization. The Company plans to open two Value City stores and two to
three shoe stores during Spring 1999.
License fees from affiliates and other operating income decreased $3.7 million,
or 52.0% from $7.1 million to $3.4 million, and decreased as a percentage of
owned sales from 2.7% to 1.0%. This decrease is due primarily to the reduction
of license fees from Shonac resulting from the acquisition and consolidation
with Value City. This was partially offset by license fees earned from third
parties by the two Valley Fair stores.
Operating profit increased from $6.8 million to $11.4 million, an increase of
$4.6 million, and increased as a percentage of owned sales from 2.6% to 3.2%, as
a result of the above factors.
Interest expense, net of interest income, increased from $1.0 million to $3.6
million due primarily to the interest on debt incurred to acquire Shonac and the
operations of Valley Fair Corporation.
Other income of $0.9 million in 1997 represented the gain recognized from
selling land, building and improvements at a site originally purchased for
future store development.
Equity in loss of joint venture represents the Company's fifty percent interest
in net losses of VCM, LTD. ("VCM"), a 50/50 joint venture between the Company
and Mazel Stores, Inc.
Income before provision for income taxes increased from $5.4 million to $6.8
million, an increase of $1.4 million but decreased as a percentage of owned
sales from 2.1% to 1.9%, as a result of the above factors.
page 7
<PAGE> 8
VALUE CITY DEPARTMENT STORES, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
================================================================================
LIQUIDITY AND CAPITAL RESOURCES
Net working capital was $209.6 million at October 31, 1998 compared to $205.8
million at August 1, 1998. Current ratios at those dates were 2.0 and 1.9 to
1.0, respectively.
Net cash used in operating activities totaled $22.1 million for the three months
ended October 31, 1998 and net cash provided by operating activities totaled
$12.5 million for the three months ended November 1, 1997. Net income, adjusted
for depreciation and amortization, provided $12.9 million of operating cash flow
for the three months ended October 31, 1998. This was offset by an increase in
inventory of $3.2 million and decreases in accounts payable and accrued expenses
of $23.7 million and $7.9 million, respectively. For the three months ended
November 1, 1997, net income, adjusted for depreciation and amortization,
provided $10.3 million of operating cash flow. In addition, operating cash flow
was increased by $0.4 million representing an increase in inventories offset by
an increase in accounts payable of $6.1 million.
Net cash used for investing activities totaled $8.4 million for the three months
ended October 31, 1998. Net cash provided by investing activities totaled $10.2
million for the three months ended November 1, 1997.
Net cash used for capital expenditures was $7.7 million and $3.1 million for the
three months ended October 31, 1998 and November 1, 1997, respectively. During
the 1998 period, capital expenditures included $3.0 million for new stores, $3.1
million for renovations of existing stores, $1.5 million for MIS equipment and
upgrades, and $0.1 million for energy management systems. Other investing
activities totaled $0.7 million, which is primarily payments made to a trust
pursuant to a deferred compensation plan. Capital Expenditures for the balance
of the fiscal year ending January 31, 1999 are estimated at approximately $11.0
million.
The Company utilizes computer technologies throughout its business to
effectively carry out its day-to-day operations. Computer technologies include
both information technology in the form of hardware and software, as well as
embedded technology in the Company's facilities and equipment. Similar to most
companies, the Company must determine whether its systems are capable of
recognizing and processing date sensitive information properly as the year 2000
approaches. The Company is utilizing a multi-phased concurrent approach to
address this issue. The phases included in the Company's approach are the
awareness, assessment, remediation, validation and implementation phases. The
Company has completed the awareness phase of its project. Furthermore, the
Company has substantially completed the assessment phase and is well into the
remediation phase. The Company is actively correcting and replacing those
systems which are not year 2000 ready in order to ensure the Company's ability
to continue to meet its internal needs and those of its suppliers and customers.
The Company currently intends to substantially complete the remediation,
validation and implementation phases of the year 2000 project prior to July
1999. This process includes the testing of critical systems to ensure that year
2000 readiness has been accomplished. The Company currently believes it will be
able to modify, replace, or mitigate its affected systems in time to avoid any
material detrimental impact on its operations. If the Company determines that it
may be unable to remediate and properly test affected systems on a timely basis,
the Company intends to develop appropriate contingency plans for any such
mission-critical systems at the time such determination is made. While the
Company is not presently aware of any significant exposure that its systems will
not be properly remediated on a timely basis, there can be no assurances that
any or all of the Company's systems are or will be year 2000 compliant. An
interruption of the Company's ability to conduct its business due to a year 2000
readiness problem could have a material adverse effect on the Company's
financial condition.
The Company estimates that the aggregate costs of its year 2000 project will be
approximately $5.0 million to $6.0 million, including costs already incurred. A
significant portion of these costs are not likely to be incremental costs, but
rather will represent the redeployment of existing employees and equipment. This
reallocation of resources is not expected to have a significant impact on the
day-to-day operations of the Company. Total costs of approximately $2.3 million
were incurred by the Company for this project through October 31, 1998. The
anticipated impact and costs of the project, as well as the date on which the
Company expects to complete the project, are based on management's best
estimates using information currently available and numerous assumptions about
future events. Based on its current estimates and information currently
available, the Company does not anticipate that the costs associated with this
project will have a material adverse effect on the Company's consolidated
financial position, results of operations or cash flows in future periods.
However, there can be no guarantee that these estimates will be achieved and
actual results could differ materially from those plans.
Page 8
<PAGE> 9
The Company has initiated formal communications with its significant suppliers,
and critical business partners to determine the extent to which the Company may
be vulnerable in the event that those parties fail to properly remediate their
own year 2000 issues. The Company has taken steps to monitor the progress made
by those parties, and intends to test critical system interfaces, as the year
2000 approaches. The Company will develop appropriate contingency plans in the
event that a significant exposure is identified relative to the dependencies on
third-party systems. While the Company is not presently aware of any such
significant exposure, there can be no guarantee that the systems of
third-parties on which the Company relies will be converted in a timely manner,
or that a failure to properly convert by another company would not have a
material adverse effect on the Company.
The Company has available a $185.0 million long-term unsecured revolving bank
credit facility with a three year term and primarily bears interest at a
floating rate of LIBOR plus 1.75%. The interest rate on $40.0 million has been
locked in at a fixed rate of 7.395% for a three year period under a swap
agreement. The terms of the credit facility require the Company to comply with
certain restrictive covenants and financial ratio tests, including minimum
tangible net worth; a maximum consolidated debt to earnings before interest,
taxes, depreciation and amortization ratio; a minimum fixed charge coverage
ratio; and, limitations on dividends, additional incurrance of debt and capital
expenditures. At October 31, 1998 the LIBOR rate was 5.40766%, borrowings
aggregated $148.8 million and $13.9 million of letters of credit were issued and
outstanding for merchandise purchases under the credit facility. The Company
believes that the cash generated by its operations, along with the available
proceeds from the credit facility will be sufficient to meet its future
obligations including capital expenditures.
SEASONALITY
The Company's business is affected by the pattern of seasonality common to most
retail businesses. Historically, the majority of its sales and operating profit
have been generated during the first six months of its fiscal year, which
includes the back-to-school and Christmas selling seasons.
ADOPTION OF ACCOUNTING STANDARDS
The Financial Accounting Standards Board ("FASB") periodically issues Statements
of Financial Accounting Standards ("SFAS"), some of which require implementation
by a date falling within or after the close of the Company's fiscal year.
SFAS No. 130, "Reporting Comprehensive Income," establishes standards for
reporting and display of comprehensive income and its components (revenues,
expenses, gains and losses) in a full set of general-purpose financial
statements and is effective for fiscal years beginning after December 15, 1997.
The Company has no items of other comprehensive income in any period presented.
SFAS No. 131, "Disclosures about Segments of an Enterprise and Related
Information," establishes standards for the way public business enterprises
report information about operating segments in annual financial statements and
requires that those enterprises report selected information about operating
segments in interim financial reports issued to shareholders. It also
establishes standards for related disclosures about products and services,
geographic areas and major customers. SFAS No. 131 is effective for financial
statements for periods beginning after December 15, 1997; however, this
statement need not be applied to interim financial statements in the initial
year of its application. The Company is currently evaluating the effects of this
statement on its financial statements which will be limited to the form and
content of its disclosures.
SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities,"
establishes accounting and reporting standards for derivative instruments and
for hedging activities. SFAS No. 133 effective for all fiscal quarters of fiscal
years beginning after June 15, 1999. The adoption of SFAS No. 133 is not
expected to have a significant impact on the Company's financial statements.
INCOME TAXES
The effective tax rate for the three months ended October 31, 1998 and November
1, 1997 was 40.5% and 39.8%, respectively. The primary reason for the increase
in the effective tax rate is due to the effect of non-deductible goodwill
amortization.
Page 9
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VALUE CITY DEPARTMENT STORES, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
================================================================================
INFLATION
The results of operations and financial condition are presented based upon
historical cost. While it is difficult to accurately measure the impact of
inflation because of the nature of the estimates required, management believes
that the effect of inflation, if any, on the results of operations and financial
condition has been minor.
SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995
The Company cautions that any forward-looking statements (as such term is
defined in the Private Securities Litigation Reform Act of 1995) contained
herein or made by management of the Company involve risks and uncertainties, and
are subject to change based on various important factors. The following factors,
among others, in some cases have affected and in the future could affect the
Company's financial performance and actual results and could cause actual
results for 1998 and beyond to differ materially from those expressed or implied
in any such forward-looking statements: decline in demand for the Company's
merchandise, the availability of desirable store locations on suitable terms,
changes in consumer spending patterns, consumer preferences and overall economic
conditions, the impact of competition and pricing, changes in weather patterns,
the ability of the Company and its vendors and suppliers to become year 2000
compliant, changes in existing or potential duties, tariffs or quotas, paper and
printing costs and the ability to hire and train associates.
Historically, the Company's operations have been seasonal, with a
disproportionate amount of sales and a majority of net income occurring in the
second fiscal quarter, reflecting increased demand during the holiday selling
season. As a result of this seasonality, any factors negatively affecting the
Company during the second quarter of any year, including adverse weather, the
timing and level of markdowns or unfavorable economic conditions, could have a
material adverse effect on the Company's financial condition and results of
operations for the entire year.
page 10
<PAGE> 11
PART II - OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
VALUE CITY DEPARTMENT STORES, INC.
================================================================================
A. The Company held its 1998 Annual Meeting of Shareholders on December 9,
1998. Holders of 24,778,464 Common Shares of the Company were present
representing 77% of the Company's 32,283,067 Common Shares issued and
outstanding and entitled to vote at the meeting.
B. The following persons were elected as members of the Company's Board of
Directors to serve until the annual meeting following their election or
until their successors are duly elected and qualified. Each person
received the number of votes for or the number of votes with authority
withheld indicated below.
<TABLE>
<CAPTION>
Name Votes For Votes Withheld
<S> <C> <C>
Ari Deshe 24,250,455 528,009
Jon P. Diamond 24,250,457 528,007
Martin P. Doolan 24,250,457 528,007
Richard Gurian 24,250,593 527,871
Dr. Norman Lamm 24,250,683 527,781
Geraldine Schottenstein 24,203,183 528,781
Jay L. Schottenstein 24,250,483 527,981
Saul Schottenstein 24,250,455 528,009
Robert L. Shook 24,250,593 527,871
Robert M. Wysinski 24,250,455 528,009
</TABLE>
C. In addition to the election of directors described above, the proposal
to approve the Value City Incentive Compensation Plan passed with
24,651,512 shares voting in favor, 124,084 shares voting against and
2,867 shares abstaining.
D. Not applicable.
page 11
<PAGE> 12
SIGNATURE
---------
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
VALUE CITY DEPARTMENT STORES, INC.
(Registrant)
By /s/ Robert M. Wysinski
--------------------------------------------
Robert M. Wysinski, Senior Vice President,
Chief Financial Officer, Treasurer
And Secretary *
Date: December 11, 1998
- ------------------------
- ------------------------------------------------------------------------------
* Mr. Wysinski is the principal financial officer and has been duly
authorized to sign on behalf of the registrant.
page 12
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
statements of income and balance sheets and is qualified in its entirety by
reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> AUG-01-1998
<PERIOD-END> OCT-31-1998
<CASH> 11,332
<SECURITIES> 0
<RECEIVABLES> 6,443
<ALLOWANCES> 0
<INVENTORY> 376,394
<CURRENT-ASSETS> 418,452
<PP&E> 310,712
<DEPRECIATION> 140,491
<TOTAL-ASSETS> 662,279
<CURRENT-LIABILITIES> 208,820
<BONDS> 165,618
0
0
<COMMON> 113,009
<OTHER-SE> 172,202
<TOTAL-LIABILITY-AND-EQUITY> 662,279
<SALES> 356,755
<TOTAL-REVENUES> 356,755
<CGS> 219,575
<TOTAL-COSTS> 348,747
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
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</TABLE>
