<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended August 3, 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 0-19149
----------------------------------------------------------
Filene's Basement Corp.
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Massachusetts 04-3016733
------------- ----------
(State or other jurisdiction of incorporation (I.R.S. Employer
or organization) Identification No.)
40 Walnut Street, Wellesley, MA 02181
-------------------------------------
(Address of principal executive offices)
(Zip Code)
(617) 348-7000
--------------
(Registrant's telephone number, including area code)
----------------------------------------------------
(Former name, former address and former fiscal year,
if changed since last report)
Indicated 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
----- -----
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS:
Indicated by check mark whether the registrant has filed all documents and
reports required to be filed by Section 2, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a
plan confirmed by a court.
Yes No
----- -----
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's classes of
Common Stock, as of the latest practicable date: 20,621,652 shares of Common
Stock as of September 10, 1996.
<PAGE> 2
FILENE'S BASEMENT CORP.
INDEX
PART I FINANCIAL INFORMATION Page No.
--------
Item 1 - Financial Statements
Consolidated Balance Sheets 3
August 3, 1996, February 3, 1996
and July 29, 1995
Consolidated Statements of Operations 4
Twenty-six and Thirteen weeks ended
August 3, 1996 and July 29, 1995
Consolidated Statements of Cash Flows 5
Twenty-six weeks ended August 3, 1996
and July 29, 1995
Notes to Consolidated Financial Statements 6 - 7
Item 2 - Management's Discussion and Analysis of 8 - 11
Financial Condition and Results of Operations
PART II OTHER INFORMATION
Item 4 - Submission of Matters to a Vote
of Security Holders 12
Item 6 - Exhibits and Reports on Form 8-K 12
Signatures 13
Exhibit 11 - Computation of Net Income per 14
Common Share
Page 2
<PAGE> 3
FILENE'S BASEMENT CORP.
( and its Wholly-Owned Subsidiaries )
<TABLE>
CONSOLIDATED BALANCE SHEETS
( Unaudited )
( dollars in thousands )
- --------------------------------------------------------------------------------
<CAPTION>
ASSETS
------
August 3, February 3, July 29,
1996 1996 1995
--------- ----------- --------
<S> <C> <C> <C>
Current assets:
Cash and cash equivalents $ 513 $ 464 $ 235
Inventories 100,962 85,777 119,917
Other current assets 10,514 26,534 19,301
Deferred income taxes -- -- 9,610
-------- -------- --------
Total current assets 111,989 112,775 149,063
Property, plant and equipment, net 61,131 67,278 68,704
Beneficial operating lease rights, net 15,468 16,125 16,782
Deferred income taxes 3,128 3,128 2,500
Intangible assets, net & other 8,696 10,746 5,917
-------- -------- --------
Total assets $200,412 $210,052 $242,966
======== ======== ========
LIABILITIES & STOCKHOLDERS' EQUITY
----------------------------------
Current liabilities:
Accounts payable 40,804 36,645 38,605
Accrued expenses 27,682 33,402 25,722
Short term debt 28,600 13,200 26,850
Obligations under capital leases, due
within one year 494 490 469
-------- -------- --------
Total current liabilities 97,580 83,737 91,646
Reserve for store closings 4,663 4,663 158
Deferred revenue 2,082 2,166 2,249
Long-term debt 10,000 35,000 35,000
Obligations under capital leases, less
portion due within one year 3,384 3,627 3,878
Stockholders' equity
Common stock, $.01 par value; authorized
70,000,000 shares; 20,607,119, 20,575,464
and 20,474,840 shares issued 206 206 205
Cost of 75,000 common shares in treasury (16) (16) (16)
Unamortized restricted stock compensation 0 (12) (25)
Additional paid-in capital 86,102 86,048 85,726
Retained earnings (3,589) (5,367) 24,145
-------- -------- --------
Total stockholders' equity 82,703 80,859 110,035
-------- -------- --------
Total liabilities and stockholders' equity $200,412 $210,052 $242,966
======== ======== ========
</TABLE>
The accompanying notes are an integral
part of the consolidated financial statements.
Page 3
<PAGE> 4
FILENE'S BASEMENT CORP.
(and its Wholly-Owned Subsidiaries)
<TABLE>
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(dollars in thousands, except per share amounts)
<CAPTION>
- -------------------------------------------------------------------------------------------------------------------------------
26 Weeks Ended - 26 Weeks Ended - 13 Weeks Ended - 13 Weeks Ended -
August 3, 1996 July 29, 1995 August 3, 1996 July 29, 1995
--------------- ---------------- ---------------- ----------------
$ % $ % $ % $ %
-------- ------ -------- ----- -------- ----- -------- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net sales $244,133 100.0% $257,943 100.0% $120,101 100.0% $130,249 100.0%
-------- ----- -------- ----- -------- ----- -------- -----
Cost of sales, including buying, receiving
and occupancy costs 184,294 75.5% 198,479 76.9% 91,084 75.8% 100,667 77.3%
-------- ----- -------- ----- -------- ----- -------- -----
Gross profit 59,839 24.5% 59,464 23.1% 29,017 24.2% 29,582 22.7%
Selling, general and administrative expenses 54,058 22.1% 60,255 23.4% 25,810 21.5% 28,664 22.0%
Amortization of intangible assets and
beneficial operating lease rights 734 0.3% 676 0.3% 367 0.3% 338 0.3%
-------- ----- -------- ----- -------- ----- -------- -----
Operating income (loss) 5,047 2.1% (1,467) -0.6% 2,840 2.4% 580 0.4%
Interest expense, net 2,178 0.9% 2,098 0.8% 911 0.8% 1,156 0.9%
-------- ----- -------- ----- -------- ----- -------- -----
Income (loss) before income taxes 2,869 1.2% (3,565) -1.4% 1,929 1.6% (576) -0.5%
Income tax provision (benefit) 1,090 0.5% (1,287) -0.5% 714 0.6% (211) -0.2%
-------- ----- -------- ----- -------- ----- -------- -----
Net income (loss) 1,779 0.7% (2,278) -0.9% 1,215 1.0% (365) -0.3%
======== ===== ======== ===== ======== ===== ======== =====
Primary income (loss) per common share:
Net income (loss) $ 0.09 $ (0.11) $ 0.06 $ (0.02)
Fully diluted income (loss) per common share:
Net income (loss) $ 0.08 $ (0.11) $ 0.06 $ (0.02)
======== ======== ======== ========
</TABLE>
The accompanying notes are an integral
part of the consolidated financial statements.
Page 4
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FILENE'S BASEMENT CORP.
( and its Wholly-Owned Subsidiaries )
<TABLE>
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
( dollars in thousands )
- --------------------------------------------------------------------------------
<CAPTION>
26 Weeks Ended - 26 Weeks Ended -
August 3, 1996 July 29, 1995
---------------- ----------------
<S> <C> <C>
Cash flows from operating activities:
Net income (loss) $ 1,779 $ (2,278)
Adjustments to reconcile net income (loss) to net cash
provided by (used in) operations:
Depreciation and amortization 6,098 6,740
Amortization related to restricted stock compensation 12 12
Deferred income taxes 0 (349)
Changes in operating assets and liabilities:
Inventory (15,185) (2,413)
Other current assets 18,237 (8,837)
Accounts payable 4,159 (10,203)
Accrued expenses (2,901) (7,774)
-------- --------
Total adjustments 10,420 (22,824)
Net cash provided by (used in) operating activities 12,199 (25,102)
Cash flows from investing activities:
Purchase of property, plant and equipment & other (2,648) (6,354)
Proceeds from sale of leasehold interest 283 288
-------- --------
Net cash used in investing activities (2,365) (6,066)
Cash flows from financing activities:
Proceeds from short-term borrowings 80,174 68,600
Payments on short-term borrowings (64,774) (41,750)
Principal payments of capital lease obligations (239) (220)
Long-term debt (25,000) 0
Proceeds from sale of common stock to employees 54 131
-------- --------
Net cash provided by (used in) financing activities (9,785) 26,761
Net decrease in cash and cash equivalents 49 (4,407)
Cash and cash equivalents at beginning of period 464 4,642
-------- --------
Cash and cash equivalents at end of period $ 513 $ 235
======== ========
Supplemental disclosures of cash flow information:
Interest paid $ 1,818 $ 2,087
Income taxes paid 199 159
</TABLE>
The accompanying notes are an integral
part of the consolidated financial statements.
Page 5
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FILENE'S BASEMENT CORP.
(and its Wholly-Owned Subsidiaries)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. The results of the periods ended August 3, 1996 and July 29, 1995 are
not necessarily indicative of the results for a full fiscal year,
because the Company's business, in common with the businesses of
retailers generally, is subject to seasonal influences, with higher
levels of sales and income generally realized in the fall season.
2. The preceding data is unaudited but, in the opinion of management,
includes all adjustments (consisting of normally occurring accruals and
deferrals) necessary for a fair presentation of the results of
operations for the periods reported, in accordance with generally
accepted accounting principles and practices consistently applied.
3. On May 23, 1996, the Company entered into a Revolving Credit and Term
Loan Agreement (the "Agreement") as amended June 28, 1996, which
replaced the Amended and Restated Credit and Override Agreement dated
October 13, 1995 and as amended on October 31, 1995, December 8, 1995
and February 3, 1996. The Agreement expires, and all loans outstanding
thereunder mature, on June 30, 1999 and includes a $65.0 million
revolving credit facility and a $10.0 million term loan, which replaced
a $50.0 million revolving credit facility and $35.0 million of fixed
rate debt.
Although the aggregate facility under the new Agreement is $10.0
million less than the previous arrangement, the Company's borrowing
capacity under the new Agreement has actually been enhanced as a result
of a broader borrowing base formula and lower overall debt levels. In
May, 1996, the Company received federal tax refunds totalling $9.6
million related to net operating losses carried back to offset prior
years' taxable income, which was applied to reduce outstanding debt.
Availability under the new Agreement is determined based on a higher
advance rate against eligible inventory than under the previous
arrangement and also provides for advances against eligible receivables
and domestic letters of credit, which previously were not included in
the borrowing base. Further, under the previous arrangement, the $35
million of fixed rate debt was a standing use of availability, while
under the new Agreement, the $10 million term loan is not considered in
the determination of availability.
Advances against eligible inventory and receivables bear interest at
either prime plus 0.50% or LIBOR plus 2.50%. The term loan bears
interest at either prime plus 0.75% or LIBOR plus 2.75%. Based on these
current rates of interest versus the previous credit facility, it is
anticipated that the
Page 6
<PAGE> 7
FILENE'S BASEMENT CORP.
(and its Wholly-Owned Subsidiaries)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Company will realize annual savings in excess of $1.5 million. In the
event the Company achieves a predetermined financial target for the
current fiscal year, the interest rate on all loans will be decreased
by 0.50%.
Mandatory payments of the term loan principal are required upon the
occurrence of certain events preceding the first anniversary of the
loan and, thereafter, based on the outstanding principal balance at
that date, in eight equal quarterly installments commencing September
30, 1997. In the event the outstanding principal of the term loan on
the first anniversary is greater than $4.0 million, the interest rate,
on the term loan only, will be permanently increased by 1.0%.
The Agreement contains new financial covenants which are less
restrictive than the previous requirements, thereby providing the
Company with greater operating flexibility. The most restrictive
covenant of the new agreement mandates cumulative minimum earnings
before interest, taxes, depreciation and amortization for specified
periods during the term of the Agreement.
4. In the fourth quarter of Fiscal 1995, the Company recorded a charge of
$10.6 million in connection with the planned closure of eight stores,
one of which was closed in Fiscal 1995 and four of which were closed in
the first quarter of Fiscal 1996. The Company has used, through the
second quarter of Fiscal 1996, $7.2 million of this reserve, primarily
in connection with ongoing lease obligations and the write-off of
abandoned fixtures. The Company believes the remaining reserve of $3.4
million is adequate to cover future costs associated with these store
closings.
Page 7
<PAGE> 8
MANAGEMENTS'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
FOR THE TWENTY-SIX WEEKS ENDED AUGUST 3, 1996
RESULTS OF OPERATIONS
- ---------------------
For the quarter ended August 3, 1996 net sales were $120.1 million, down 8
percent from last year's second quarter sales of $130.2 million. Comparable
store sales for the thirteen week second quarter were up 3 percent versus the
comparable thirteen week period last year. Net sales for the twenty-six week
period of $244.1 million were down 5 percent from last year's sales of $257.9
million. Comparable store sales for the six month period ended August 3, 1996
were up 1 percent versus the comparable period last year. For the twelve month
period ended August 3, 1996, no new stores were opened and seven stores were
closed. The total number of stores in operation on August 3, 1996 and July 29,
1995 were 43 and 50, respectively.
Cost of goods sold as a percentage of sales was 75.8 percent and 75.5 percent
for the thirteen and twenty-six week periods ended August 3, 1996, respectively,
compared to 77.3 percent and 76.9 percent for the same periods in the prior
year. The decrease in cost of goods sold as a percentage of sales was
attributable to a decrease in markdowns and increase in markup on cost of sales.
Selling, general and administrative expenses for the second quarter of Fiscal
1996 were $25.8 million, or 21.5 percent of sales, compared to $28.7 million, or
22.0 percent of sales, for the same period last year. For the six month period
ended August 3, 1996, selling, general and administrative expenses were $54.1
million, or 22.1 percent of sales, compared to $60.3 million, or 23.4 percent of
sales, last year. The decreases in selling, general and administrative expenses
for the thirteen and twenty-six week periods were primarily related to
reductions in payroll and payroll related expenses as a result of store closings
and a decrease in advertising expenditures.
In the fourth quarter of Fiscal 1995, the Company recorded a charge of $10.6
million in connection with the planned closure of eight stores, one of which was
closed in Fiscal 1995 and four were closed in the first quarter of Fiscal 1996.
The Company has used, through the second quarter of Fiscal 1996, $7.2 million of
this reserve, primarily in connection with ongoing lease obligations and the
write-off of abandoned fixtures. The Company believes the remaining reserve of
$3.4 million is adequate to cover future costs associated with these store
closings.
Net income for the quarter ended August 3, 1996 was $1.2 million, or 6 cents per
share, on 21.0 million weighted average shares outstanding, compared to a net
loss of $0.4 million, or 2 cents per share, on 20.8 million weighted average
shares outstanding for the
Page 8
<PAGE> 9
MANAGEMENTS'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
FOR THE TWENTY-SIX WEEKS ENDED AUGUST 3, 1996
quarter ended July 29, 1995. For the six month period ended August 3, 1996, net
income was $1.8 million, or 9 cents per share, on 20.6 million primary weighted
average shares outstanding and 8 cents per share on 21.0 million fully diluted
weighted average shares outstanding, compared to a net loss of $2.3 million, or
11 cents per share, on 20.8 million primary and fully diluted weighted average
shares outstanding for the same period last year.
LIQUIDITY AND CAPITAL RESOURCES
- -------------------------------
On May 23, 1996, the Company entered into a Revolving Credit and Term Loan
Agreement (the "Agreement") as amended June 28, 1996, which replaced the Amended
and Restated Credit and Override Agreement dated October 13, 1995 and as amended
on October 31, 1995, December 8, 1995 and February 3, 1996. The Agreement
expires, and all loans outstanding thereunder mature, on June 30, 1999 and
includes a $65.0 million revolving credit facility and a $10.0 million term
loan, which replaced a $50.0 million revolving credit facility and $35.0 million
of fixed rate debt.
Although the aggregate facility under the new Agreement is $10.0 million less
than the previous arrangement, the Company's borrowing capacity under the new
Agreement has actually been enhanced as a result of a broader borrowing base
formula and lower overall debt levels. In May, 1996, the Company received
federal tax refunds totalling $9.6 million related to net operating losses
carried back to offset prior years' taxable income, which was applied to reduce
outstanding debt. Availability under the new Agreement is determined based on a
higher advance rate against eligible inventory than under the previous
arrangement and also provides for advances against eligible receivables and
domestic letters of credit, which previously were not included in the borrowing
base. Further, under the previous arrangement, the $35 million of fixed rate
debt was a standing use of availability, while under the new Agreement, the $10
million term loan is not considered in the determination of availability.
Advances against eligible inventory and receivables bear interest at either
prime plus 0.50% or LIBOR plus 2.50%. The term loan bears interest at either
prime plus 0.75% or LIBOR plus 2.75%. Based on these current rates of interest
versus the previous credit facility, it is anticipated that the Company will
realize annual savings in excess of $1.5 million. In the event the Company
achieves a predetermined financial target for the current fiscal year, the
interest rate on all loans will be decreased by 0.50%.
Mandatory payments of the term loan principal are required upon the
Page 9
<PAGE> 10
MANAGEMENTS'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
FOR THE TWENTY-SIX WEEKS ENDED AUGUST 3, 1996
occurrence of certain events preceding the first anniversary of the loan and,
thereafter, based on the outstanding principal balance at that date, in eight
equal quarterly installments commencing September 30, 1997. In the event the
outstanding principal of the term loan on the first anniversary is greater than
$4.0 million, the interest rate, on the term loan only, will be permanently
increased by 1.0%.
The Agreement contains new financial covenants which are less restrictive than
the previous requirements, thereby providing the Company with greater operating
flexibility. The most restrictive covenant of the new agreement mandates
cumulative minimum earnings before interest, taxes, depreciation and
amortization for specified periods during the term of the Agreement. During the
twenty-six week period ended August 3, 1996 and as of August 3, 1996, the
Company was in compliance with all covenants of the previous and new
arrangements.
As of August 3, 1996, the Company had $14.4 million of working capital and $18.4
million of remaining credit availability. As of that date, outstanding
obligations under the Agreement were $38.6 million, including the $10.0 million
term loan, and the Company had $22.5 million in letter of credit commitments.
Short term trade credit represents a significant source of financing for
inventory purchases and arises from the willingness of vendors to grant extended
payment terms. Merchandise inventories are financed either by the vendors or
third party factors. The Company is experiencing an increased level of trade
credit versus the same time last year.
The Company believes that internally generated working capital, existing vendor
and third party factor arrangements and funds available under the recently
executed Agreement will be adequate to meet its merchandise inventory and normal
operating expense needs, as well as presently anticipated capital expenditure
requirements for the remainder of the fiscal year. However, the Company's
operating results and the adequacy of its working capital could be adversely
affected if, for any reason, the Company's borrowing base was to become
impaired, or otherwise be deemed ineligible, thereby diminishing the level of
available funds.
The Company has never paid a cash dividend and has no plans to pay dividends on
its common stock.
The Company's business is seasonal, reflecting increased consumer demand in the
fall season. The second half of each fiscal year provides a greater portion of
the Company's annual sales and
Page 10
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MANAGEMENTS'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
FOR THE TWENTY-SIX WEEKS ENDED AUGUST 3, 1996
operating profit.
This Quarterly Report on Form 10-Q contains forward-looking statements. For this
purpose, any statements contained herein that are not statements of historical
fact may be deemed to be forwardlooking statements. Without limiting the
foregoing, the words "believes", "anticipates", "plans", "expects" and similar
expressions are intended to identify forward looking statements. Factors which
may cause actual results to differ materially from those indicated by such
forward-looking statements include: (i) economic and weather conditions which
affect the buying patterns of the Company's customers, (ii) actions of the
Company's competitors and the Company's ability to respond to such actions (iii)
the continued support of the Company's numerous providers of goods and services
(iv) the continued success of the Company's efforts to implement planned
strategic initiatives and (v) other factors described in the Company's reports
filed with the Securities and Exchange Commission from time to time.
Page 11
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ITEM 4 SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
<TABLE>
The Annual Meeting of Stockholders of Filene's Basement Corp. was held on June
26, 1996, for the purposes of the election of Mone Anathan III and Harold Leppo
as the two Class II Directors of the Company to serve until the 1999 Annual
Meeting of Stockholders and until their successors are duly elected and
qualified and to act upon a stockholder proposal to declassify the Board of
Directors so that all directors are elected annually. The following tables set
forth the results of shareholder votes:
1. Election of Class II Directors:
<CAPTION>
Votes Votes Votes
in Favor Withheld Against
-------- -------- -------
<S> <C> <C> <C>
Election of Mone Anathan III
as Class II Director 18,385,500 258,739 0
Election of Harold Leppo
as Class II Director 18,386,870 257,369 0
</TABLE>
<TABLE>
2. Shareholder proposal to declassify the Board of Directors (which was not
passed by the shareholders):
<CAPTION>
Votes
Votes Votes Votes Delivered
in Favor Against Abstain Not Voted
-------- ------- ------- ---------
<S> <C> <C> <C>
5,309,033 5,642,312 177,113 7,515,781
</TABLE>
ITEM 6 EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
10.39.1................ First Amendment Agreement amending the Revolving
Credit and Term Loan Agreement among the Company,
Filene's Basement, Inc and Filene's Basement Corp
and the First National Bank of Boston. Dated as of
June 28, 1996 (filed herewith)
11..................... Computation of Net Income per Common Share (filed
herewith)
- --------------------------------------------------------------------------------
(b) No reports on Form 8-K were filed during the quarter ended August 3, 1996
for which this report is filed.
Page 12
<PAGE> 13
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, being also its principal financial
officer.
FILENE'S BASEMENT CORP.
/s/ Steven Siegel
---------------------------
Steven Siegel
Executive Vice President
and Chief Financial Officer
DATE: September 13, 1996
Page 13
<PAGE> 1
Exhibit 10.39.1
---------------
FIRST AMENDMENT AGREEMENT
FIRST AMENDMENT AGREEMENT dated as of June 28, 1996 (this "Amendment") by
and among (a) Filene's Basement, Inc., a Massachusetts corporation (the
"Borrower"), (b) Filene's Basement Corp., a Massachusetts corporation (the
"Guarantor"), (c) The First National Bank of Boston and the other lending
institutions listed on SCHEDULE 1 to the Credit Agreement (as hereinafter
defined) (collectively, the "Banks"), (d) The First National Bank of Boston, as
agent for itself and the Banks (the "Agent"), amending the Revolving Credit and
Term Loan Agreement dated as of May 23, 1996 (as amended and in effect from
time to time, the "Credit Agreement") among the Borrower, the Guarantor, the
Banks and the Agent. Capitalized terms used herein without other definition
shall have the meanings assigned to them in the Credit Agreement.
WHEREAS, upon the terms and subject to the conditions contained herein, the
Borrower, the Guarantor, the Agent and the Banks wish to amend certain
provisions of the Credit Agreement;
NOW, THEREFORE, in consideration of the mutual agreements contained in the
Credit Agreement and herein and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged the parties hereto
hereby agree as follows:
[SECTION]1. AMENDMENT OF SECTION 27 OF THE CREDIT AGREEMENT. Section 27
of the Credit Agreement is hereby amended by inserting immediately before the
words "the definition of Majority Banks" which appears in the second sentence of
[SECTION] 27 the phrases "the Borrower's Obligations under the Credit Agreement
to pay principal and/or interest on account of the Loans may not be forgiven in
whole or in part without the written consent of all of the Banks and the
Borrower; this [SECTION]27 may not be changed without the written consent of
all of the Banks and the Borrower;".
[SECTION]2. CONDITIONS TO EFFECTIVENESS. This Amendment shall not become
effective until the Agent receives facsimile copies of original counterparts
(to be followed promptly by original counterparts) or original counterparts of
this Amendment, duly executed by each of the Borrower, the Guarantor, the Agent,
and the Banks.
[SECTION]3. REPRESENTATION AND WARRANTIES; NO DEFAULT; AUTHORIZATION.
Each of the Borrower and the Guarantor hereby represents and warrants to each
of the Agent and the Banks as follows:
(a) Each of the representations and warranties of each of the Borrower and
the Guarantor contained in the Credit Agreement, the other Loan Documents or in
any document or instrument delivered pursuant to or in connection with the
Credit Agreement, the other Loan Documents or this Amendment was true as of the
date as of which it was made and is true as and at the date of this Amendment,
and no Default or Event of Default has occurred and is continuing as of the
date of this Amendment; and
(b) This Amendment has been duly authorized, executed and delivered by
each of the Borrower and the Guarantor and shall be in full force and effect
upon the satisfaction of the conditions set forth in [SECTION]2 hereof, and
the agreements of each of the Borrower and the Guarantor party hereto
contained herein, in the Credit Agreement, as amended, and the other Loan
Documents
<PAGE> 2
-2-
respectively constitute the legal, valid and binding obligations of
each of the Borrower and the Guarantor, enforceable against such Borrower or
Guarantor in accordance with their respective terms.
[SECTION]4. ENTIRE AGREEMENT. This Amendment, together with the Credit
Agreement as amended hereby, and the other Loan Documents, express the entire
understanding of the parties with respect to the transactions contemplated
hereby. Neither this Amendment nor any term hereof may be changed, waived,
discharged or terminated except as provided in [SECTION]27 of the Credit
Agreement.
[SECTION]5. RATIFICATION, ETC. Except as expressly amended hereby, the
Credit Agreement, the other Loan Documents and all documents, instruments and
agreements related thereto are hereby ratified and confirmed in all respects and
shall continue in full force and effect. All references in the Credit Agreement
or other Loan Documents or in any related agreement or instrument to the Credit
Agreement or the other Loan Documents shall hereafter refer to the Credit
Agreement as amended hereby, pursuant to the provisions of the Credit Agreement.
[SECTION]6. IMPLIED WAIVER. Except as expressly provided herein,
nothing contained herein shall constitute a waiver of, impair or otherwise
affect any Obligations, any other obligations of the Borrower or the Guarantor
or any right of the Agent or the Banks consequent thereon.
[SECTION]7. COUNTERPARTS. This Amendment may be executed in one or
more counterparts, each of which shall be deemed an original but which together
shall constitute one and the same instrument.
[SECTION]9. GOVERNING LAW. THIS AMENDMENT SHALL FOR ALL PURPOSES BE
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE COMMONWEALTH
OF MASSACHUSETTS (WITHOUT REFERENCE TO CONFLICTS OF LAW).
<PAGE> 3
-3-
IN WITNESS WHEREOF, the parties hereto have executed this Amendment as a
document under seal as of the date first above written.
FILENE'S BASEMENT, INC.
By: /s/ Steven Siegel
------------------------------------
Title: Executive Vice President &
Chief Financial Officer
FILENE'S BASEMENT CORP.
By: /s/ Steven Siegel
------------------------------------
Title: Executive Vice President &
Chief Financial Officer
THE FIRST NATIONAL BANK OF BOSTON,
Individually and as Agent
By:
------------------------------------
Title:
<PAGE> 4
-3-
IN WITNESS WHEREOF, the parties hereto have executed this Amendment as a
document under seal as of the date first above written.
FILENE'S BASEMENT, INC.
By:
------------------------------------
Title:
FILENE'S BASEMENT CORP.
By:
------------------------------------
Title:
THE FIRST NATIONAL BANK OF BOSTON,
Individually and as Agent
By: /s/ Betsy Ratto
------------------------------------
Title: Vice President
<PAGE> 5
-4-
RATIFICATION OF GUARANTY
The undersigned guarantor hereby acknowledges and consents to the foregoing
Amendment as of June 28, 1996 and agrees that the Guaranty dated as of May 23,
1996, in favor of the Agent for the benefit of the Agent and the Banks, and all
other Loan Documents to which the Guarantor is a party remain in full force and
effect, and the Guarantor confirms and ratifies all of its obligations
thereunder.
FILENE'S BASEMENT CORP.
By: /s/ Steven Siegel
------------------------------------
Title: Executive Vice President &
Chief Financial Officer
<PAGE> 1
FILENE'S BASEMENT CORP. EXHIBIT 11
<TABLE>
Computation of Net Income per Common Share
( dollars in thousands )
- --------------------------------------------------------------------------------------------------------------------
Twenty-Six Weeks Twenty-Six Weeks Quarter Quarter
Ended Ended Ended Ended
August 3, 1996 July 29, 1995 August 3, 1996 July 29, 1995
-------------- ------------- -------------- -------------
<S> <C> <C> <C> <C>
The computation of net in-
come available and adjusted
shares outstanding follows:
Net income (loss) as
reported................. $ 1,779 $ (2,278) $ 1,215 $ (365)
=========== =========== =========== ===========
Net income (loss) used for
primary and fully diluted
computations.................. $ 1,779 $ (2,278) $ 1,215 $ (365)
=========== =========== =========== ===========
Weighted average number
of common shares
outstanding................... 20,507,120 20,335,486 20,513,651 20,345,216
Add (where dilutive):
Assumed exercise of those
options that are common
stock equivalents net of
treasury shares deemed to
have been repurchased at
average market price for
the period................... 129,599 473,717 448,042 496,550
----------- ----------- ----------- -----------
Weighted average number of
common and common equivalent
shares outstanding used for
primary computations.............. 20,636,719 20,809,203 20,961,693 20,841,766
=========== =========== =========== ===========
Add: Additional dilution assuming
exercise of options net of
treasury shares deemed to have
been repurchased at the end of
the period market price....... 314,043 - 20,014 -
Weighted average number of
common and common equivalent
shares outstanding used for fully
diluted computations.............. 20,950,762 20,809,203 20,981,707 20,841,766
=========== =========== =========== ===========
</TABLE>
Page 14
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C> <C>
<PERIOD-TYPE> 3-MOS 6-MOS
<FISCAL-YEAR-END> FEB-03-1996 FEB-03-1996
<PERIOD-END> AUG-03-1996 AUG-03-1996
<CASH> 513 513
<SECURITIES> 0 0
<RECEIVABLES> 0 0
<ALLOWANCES> 0 0
<INVENTORY> 100,962 100,962
<CURRENT-ASSETS> 111,989 111,989
<PP&E> 123,571 123,571
<DEPRECIATION> 62,440 62,440
<TOTAL-ASSETS> 200,412 200,412
<CURRENT-LIABILITIES> 97,580 97,580
<BONDS> 10,000 10,000
<COMMON> 206 206
0 0
0 0
<OTHER-SE> 82,497 82,497
<TOTAL-LIABILITY-AND-EQUITY> 200,412 200,412
<SALES> 120,101 244,133
<TOTAL-REVENUES> 120,101 244,133
<CGS> 91,084 184,294
<TOTAL-COSTS> 91,084 184,294
<OTHER-EXPENSES> 26,177 54,792
<LOSS-PROVISION> 0 0
<INTEREST-EXPENSE> 911 2,178
<INCOME-PRETAX> 1,929 2,869
<INCOME-TAX> 714 1,090
<INCOME-CONTINUING> 1,215 1,779
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> 1,215 1,779
<EPS-PRIMARY> 0.06 0.09
<EPS-DILUTED> 0.06 0.08
</TABLE>
