UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported):January 28, 1997
-----------------
(January 13, 1997)
Bradlees, Inc.
---------------
(Exact Name of Registrant As Specified In Its Charter)
Massachusetts
-------------------
(State Or Other Jurisdiction of Incorporation)
1-11134 04-3156108
------------------------ --------------------------------
(Commission File Number) (IRS Employer Identification No.)
One Bradlees Circle; Braintree, Massachusetts 02184
- ----------------------------------------------- ------
(Address Of Principal Executive Offices) (Zip Code)
(617) 380-3000
------------------
(Registrant's telephone number, including area code)
Not Applicable
-------------------
(Former name or former address, if changed since last report)
Exhibit Index on Page 5
Page 1 of 12 (Including Exhibits)
Item 5: OTHER EVENTS
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Beginning on January 28, 1997, Bradlees, Inc. (the "Company")
will distribute to its banks and other credit providers a
summary of its financial plan (the "Plan") for the fiscal year
ending January 31, 1998 ("fiscal 1997"). Also, on January 13,
1997, the Company received approval from its lenders under its
$200 million Debtor-in-Possession (DIP) facility to amend the
minimum earnings covenant for the fourth quarter of fiscal 1996
and the first quarter of fiscal 1997. The amendment to the DIP
facility and the Plan are attached hereto as Exhibits 10.6 and
20, respectively. In addition, on January 21, 1997, the U.S.
Bankruptcy Court granted the Company a six-month extension,
until August 4, 1997, of its exclusive right to file a plan of
reorganization.
The Plan reflects an EBITDA (as defined in exhibit 20) for
fiscal 1997 of $27.2 million before restructuring, a
significant improvement from forecasted fiscal 1996 results,
which the Company believes it can achieve primarily through
expense reductions, an increase of 1.4% in the gross margin
rate, and the prior closings of 27 unprofitable stores in fiscal
1996. The Plan also reflects a 1% increase in annual comparable
store sales. The Plan is based on 109 stores after the planned
closing of one additional store in April, 1997. Final audited
fiscal 1996 results are expected to be released by late March,
1997.
The Company will continue to focus on merchandise quality and
fashion but is making the following modifications to its
business strategy: (a) lowering opening price points on
selective merchandise categories to enhance value, increase
customer traffic and avoid costly promotions; (b) reintroducing
certain basic convenience and commodity products which are
typical to a discount store; (c) reinstituting a layaway program
in the second half of fiscal 1997; (d) reducing the amount and
frequency of markdowns through improved inventory management;
(e) establishing sales and margin goals for each item advertised
in weekly circulars with improved monitoring of item
productivity; (f) focusing on making the weekly circulars more
item-intensive and price-point oriented and reducing less
productive advertising mediums; and (g) improving operating
efficiencies to achieve further cost reductions.
The Company is distributing the Plan to its banks and other
credit providers to facilitate their credit analyses. THE PLAN
SHOULD NOT BE RELIED UPON FOR ANY OTHER PURPOSE and should be
read in conjunction with the Company's Form 10-Q for the third
quarter ended November 2, 1996 and Form 10-K for the fiscal year
ended February 3, 1996 (fiscal 1995). The Plan is being
reported publicly solely because it is being distributed to a
large number of the Company's vendors for purposes of their
credit analyses. Although the Company is publicly disclosing
the Plan, the Company does not believe it is obligated to
provide such information indefinitely, and the Company may cease
making such disclosures at any time. The Plan and the fiscal
1996 forecast were not examined, reviewed or compiled by the
Company's independent public accountants. The Company is not
obligated to update the Plan or the fiscal 1996 forecast to
reflect subsequent events or developments. The Plan and the
fiscal 1996 forecast are subject to future adjustments, if any,
that could materially affect such information.
2
The Plan and the fiscal 1996 forecast were not prepared with a
view toward compliance with the guidelines established by the
American Institute of Certified Public Accountants or the rules
and regulations of the Securities and Exchange Commission
regarding financial projections. While presented with numerical
specificity, the Plan and the fiscal 1996 forecast contain
forward looking statements which are based upon a variety of
assumptions (including assumptions concerning the success of the
Company's merchandising, advertising and operational strategies
and the related effects on sales and gross margin and the
achievement of expected expense reductions) that may not be
realized and are subject to significant business, economic and
competitive uncertainties and potential contingencies, many of
which are beyond the Company's control. Consequently, the Plan
and the fiscal 1996 forecast should not be regarded as a
representation or warranty by the Company, or any other person,
that the projections contained therein will be realized. Actual
results may vary materially from those presented in the Plan and
fiscal 1996 forecast.
Item 7: FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION
AND EXHIBITS
-------------------------------------------------------
Exhibit:
10.1* Debtor-in-Possession Revolving Credit and Guaranty
Agreement, dated as of June 23, 1995, between Chemical
Bank, as Agent, and Bradlees Stores, Inc., a Debtor-in-
Possession, with Bradlees Administrative Co., Inc.
and the Subsidiaries of the Borrower as Guarantors, is
incorporated by reference from the Company's Form 8-K
dated July 26, 1995, Item 7, Exhibit 10.1 as filed with
the Securities and Exchange Commission on July 27, 1995.
10.2* First Amendment, dated as of June 30, 1995, to Debtor-in-
Possession Revolving Credit and Guaranty Agreement, is
incorporated by reference from the Company's Form 8-K
dated July 26, 1995, Item 7, Exhibit 10.2, as filed with the
Securities and Exchange Commission on July 27, 1995.
10.3* Second Amendment, dated as of August 9, 1995, to Debtor-
in-Possession Revolving Credit and Guaranty Agreement,
is incorporated by reference from the Company's Form 10-Q
for the quarterly period ended August 12, 1995, Part II, Item
6,Exhibit 10.3, as filed with the Securities and Exchange
Commission on September 26, 1995.
10.4* Third Amendment, dated as of March 15, 1996, to Debtor-
in-Possession Revolving Credit and Guaranty Agreement,
dated as of June 23, 1995, between Chemical Bank, as Agent
and Societe Generale, as Co-Agent, and Bradlees Stores,
Inc., a Debtor-in-Possession, with Bradlees Administrative
Co., Inc. and the Subsidiaries of the Borrower as Guarantors,
is incorporated by reference from the Company's Form 8-K
dated March 29, 1996,Item 7, Exhibit 10.4, as filed with the
Securities and Exchange Commission on April 1, 1996.
- ----------------------
* Previously filed
3
10.5* Fourth Amendment, dated as of September 13, 1996, to
Debtor-in-Possession Revolving Credit and Guaranty
Agreement, dated as of June 23, 1995, between The Chase
Manhattan Bank, as Agent and Societe Generale, as
Co-Agent, and Bradlees Stores, Inc., a Debtor-in-Possession,
with Bradlees Administrative Co., Inc. and the Subsidiaries
of the Borrower as Guarantors, is incorporated by reference
from the Company's Form 10-Q for the quarterly period
ended August 3, 1996, Part II, Item 6, Exhibit 10.5, as filed
with the Securities and Exchange Commission on
September 17, 1996.
10.6 Fifth Amendment, dated as of January 13, 1997, to
Debtor-in-Possession Revolving Credit and Guaranty
Agreement, dated as of June 23, 1995, between The Chase
Manhattan Bank, as Agent and Societe Generale, as
Co-Agent, and Bradlees Stores, Inc., a Debtor-in-Possession,
with Bradlees Administrative Co., Inc. and the Subsidiaries of
the Borrower as Guarantors.
20 Fiscal 1997 Summary Financial Plan
- -----------------------
* Previously filed
4
INDEX TO EXHIBITS
Exhibit No. Exhibit Page No.
- ----------- -------- ----------
10.1* Debtor-in-Possession Revolving Credit and Guaranty
Agreement,
dated as of June 23, 1995, between Chemical Bank, as Agent, and
Bradlees Stores, Inc., a Debtor-in-Possession, with Bradlees
Administrative Co., Inc. and the Subsidiaries of the Borrower
as Guarantors, is incorporated by reference from the
Company's Form 8-K dated July 26, 1995, Item 7, Exhibit 10.1
as filed with the Securities and Exchange Commission on July
27, 1995.
10.2* First Amendment, dated as of June 30, 1995, to
Debtor-in-Possession Revolving Credit and Guaranty Agreement,
is incorporated by reference from the Company's Form 8-K dated
July 26, 1995, Item 7, Exhibit 10.2, as filed with the
Securities and Exchange Commission on July 27, 1995.
10.3* Second Amendment, dated as of August 9, 1995, to
Debtor-in-Possession Revolving Credit and Guaranty Agreement,
is incorporated by reference from the Company's Form 10-Q for
the quarterly period ended
August 12, 1995, Part II, Item 6, Exhibit 10.3, as filed with
the Securities and Exchange Commission on September 26, 1995.
10.4* Third Amendment, dated as of March 15, 1996, to
Debtor-in-Possession Revolving Credit and Guaranty Agreement,
dated as of June 23, 1995, between Chemical Bank, as Agent and
Societe Generale, as Co-Agent,
and Bradlees Stores, Inc., a Debtor-in-Possession, with
Bradlees Administrative Co., Inc. and the Subsidiaries of the
Borrower as Guarantors, is incorporated by reference from the
Company's Form 8-K dated March 29, 1996, Item 7, Exhibit 10.4,
as filed with the
Securities and Exchange Commission on April 1, 1996.
10.5* Fourth Amendment, dated as of September 13, 1996, to
Debtor-in-Possession Revolving Credit and Guaranty Agreement,
dated as of June 23, 1995, between The Chase Manhattan Bank,
as Agent,
and Societe Generale, as Co-Agent, and Bradlees Stores, Inc., a
Debtor-in-Possession, with Bradlees Administrative Co., Inc.
and the Subsidiaries of the Borrower as Guarantors, is
incorporated by reference from the Company's Form 10-Q for the
quarterly period ended August 3, 1996, Part II, Item 6,
Exhibit 10.5, as filed with the Securities and Exchange
Commission on September 17, 1996.
10.6 Fifth Amendment, dated as of January 13, 1997, to 7
Debtor-in-Possession
Revolving Credit and Guaranty Agreement, dated as of June 23,
1995, between The Chase Manhattan Bank, as Agent and Societe
Generale, as Co-Agent, and Bradlees Stores, Inc., a
Debtor-in-Possession, with Bradlees Administrative Co., Inc.
and the Subsidiaries of the Borrower as Guarantors.
20 Fiscal 1997 Summary Financial Plan 10
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* Previously filed
5
BRADLEES, INC.
AND SUBSIDIARIES
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.
BRADLEES, INC.
Date: January 28, 1997 By /s/ PETER THORNER
--------------------------------
Peter Thorner
Chairman, President and
Chief Executive Officer
Date: January 28, 1997 By /s/ CORNELIUS F. MOSES III
--------------------------------
Cornelius F. Moses III
Senior Vice President,
Chief Financial Officer
6
Exhibit 10.6
FIFTH AMENDMENT TO REVOLVING CREDIT AND GUARANTY AGREEMENT
FIFTH AMENDMENT, dated as of January 13, 1997 (the
"Amendment"), to the REVOLVING CREDIT AND GUARANTY AGREEMENT,
dated as of June 23, 1995, among BRADLEES STORES, INC., a
Massachusetts corporation (the "Borrower"), as a debtor and
debtor-in-possession under Chapter 11 of the Bankruptcy Code,
the Guarantors named therein (the "Guarantors"), as debtors and
debtors-in possession under Chapter 11 of the Bankruptcy Code,
THE CHASE MANHATTAN BANK (formerly known as Chemical Bank), a
New York banking corporation ("Chase"), each of the other
financial institutions party thereto (together with Chase, the
"Banks") and THE CHASE MANHATTAN BANK, as Agent for the Banks
(in such capacity, the "Agent") and SOCIETE GENERALE, as
Co-Agent for the Banks;
W I T N E S S E T H:
WHEREAS, the Borrower, the Guarantors, the Banks, the Agent
and the Co-Agent are parties to that certain Revolving Credit
and Guaranty Agreement, dated as of June 23, 1995 (as heretofore
amended by that certain First Amendment to Revolving Credit and
Guaranty Agreement dated as of June 30, 1995, that certain
Second Amendment to Revolving Credit and Guaranty Agreement
dated as of August 10, 1995, that certain Third Amendment to
Revolving Credit and Guaranty Agreement dated as of March 15,
1996, that certain Amendment Letter Agreement dated August 15,
1996 and that certain Fourth Amendment to the Revolving Credit
and Guaranty Agreement dated as of September 13, 1996, and as
the same may be amended, modified or supplemented from time to
time, the "Credit Agreement"); and
WHEREAS, the Borrower and the Guarantors have requested that
from and after the Effective Date (as hereinafter defined) of
this Amendment, the Credit Agreement be amended subject to and
upon the terms and conditions set forth herein.
1. As used herein all terms which are defined in the Credit
Agreement shall have the same meanings herein.
2. Section 6.05 of the Credit Agreement is hereby amended by
deleting the table set forth therein in its entirety and
inserting in lieu thereof the following table:
Date: EBITDA
February 1, 1997 ($ 90,000,000)
May 3, 1997 ($100,000,000)
3. This amendment shall not become effective until the date
(the "Effective Date") on which (i) this Amendment shall have
been executed by the Borrower, the Guarantors, Banks
constituting the Required Banks and the Agent, and the Agent
shall have received evidence satisfactory to it of such
execution and (ii) the Borrower (with the approval of the
Bankruptcy Court, such approval to be evidenced by the entry of
an order satisfactory in form and substance to the Agent) shall
have paid to the Agent on behalf of the Banks an amendment fee
equal to $250,000.
4. The Borrower agrees that its obligations set forth in
Section 10.05 of the Credit Agreement shall extend to the
preparation, execution and delivery of this Amendment.
7
5. This Amendment shall be limited precisely as written and
shall not be deemed
(a) to be a consent granted pursuant to, or a waiver or
modification of, any other term or condition of the Credit
Agreement or any of the instruments or agreements referred to
therein or (b) to prejudice any right or rights which the Agent
or the Banks may now have or have in the future under or in
connection with the Credit Agreement or any of the instruments
or agreements referred to herein. Whenever the Credit Agreement
is referred to in the Credit Agreement or any of the
instruments, agreements or other documents or papers executed or
delivered in connection therewith, such reference shall be
deemed to mean the Credit Agreement as modified by this
Amendment.
6. This Amendment may be executed in any number of
counterparts and by the different parties hereto in separate
counterparts, each of which when so executed and delivered shall
be deemed to be an original and all of which taken together
shall constitute but one and the same instrument.
7. This Amendment shall be governed by, and construed in
accordance with, the laws of the State of New York.
IN WITNESS WHEREOF, the parties hereto have caused this
Amendment to be duly executed as of the day and the year first
above written.
BRADLEES STORES, INC.
By: Cornelius F. Moses, III
Title: Senior Vice President, Chief Financial Officer
GUARANTORS:
BRADLEES, INC. BRADLEES ADMINISTRATIVE CO., INC. DOSTRA REALTY
CO., INC. MAXIMEDIA SERVICES, INC. NEW HORIZONS OF BRUCKNER,
INC. NEW HORIZONS OF WESTBURY, INC. NEW HORIZONS OF YONKERS, INC.
By: Gary Jones
Title: Vice President, Treasurer
THE CHASE MANHATTAN BANK, Individually and as Agent
By: Neil R. Boylan
Title: Vice President
270 Park Avenue New York, New York 10017
SOCIETE GENERALE, Individually and as Co-Agent
By: John J. Wagner
Title: Vice President
1211 Avenue of the Americas New York, New York 10020
FLEET NATIONAL BANK
By: John C. McDonough
Title: Vice President
75 State Street, 4th Floor Boston, Massachusetts 02109
8
HELLER FINANCIAL, INC.
By: Salvatore Salzillo
Title: Assistant Vice President
101 Park Avenue New York, New York 10178
JACKSON NATIONAL LIFE INSURANCE
COMPANY
By: PPM America, Inc., as
Attorney-in-Fact for
Jackson National Life
Insurance Company
By: Stuart Lissner
Title: Vice President
225 West Wacker, Suite 1200 Chicago, Illinois 60606
ABN AMRO BANK N.V. BOSTON BRANCH
By: Brian M. Horgan
Title: Vice President
By: Carol A. Levine
Title: Senior Vice President & Managing Director
One Post Office Square, 39th Floor Boston, Massachusetts 02109
BHF-BANK AKTIENGESELLSCHAFT GRAND CAYMAN BRANCH
By: John Sykes
Title: Assistant Vice President
By: Perry Forman
Title:Vice President
590 Madison Avenue New York, New York 10022-2540
MANUFACTURERS & TRADERS TRUST COMPANY
By: J. Michael Carter
Title: Administrative Vice President
350 Park Avenue, 6th Floor New York, New York 10022
SIGNET BANK
By: Mara Sierocinski
Title: Assistant Vice President
7 North Eighth Street P.O. Box 25641 Richmond, Virginia 23260
CREDIT AGRICOLE
By: Dean Balice
Title: Senior Vice President and Branch Manager
55 East Monroe, Suite 4700 Chicago, Illinois 60603
9
BRADLEES, INC. EXHIBIT 20
CONDENSED INCOME STATEMENT Page 1 of 3
MANAGEMENT FORMAT
($ 000's)
FISCAL 1997 SUMMARY FINANCIAL PLAN
QTR1 QTR2 QTR3 QTR4 ANNUAL
------- ------- ------- ------- ---------
Owned Sales 284,498 318,595 365,793 453,669 1,422,555
Food Service Sales 1,641 1,822 1,791 2,010 7,264
Leased Sales 10,845 14,725 14,222 14,494 54,286
----------------------------------------------
Total Sales 296,984 335,142 381,806 470,173 1,484,105
Gross Margin $ 80,584 100,433 110,662 136,198 427,877
GM % (based on owned sales) 28.3% 31.5% 30.3% 30.0% 30.1%
SG&A Expenses (101,408)(100,492)(101,664)(109,164) (412,728)
Other Income 2,465 3,212 3,161 3,239 12,077
----------------------------------------------
EBITDA before Restructuring (18,359) 3,153 12,159 30,273 27,226
----------------------------------------------
Cash Restructuring* (1,923) (1,747) (1,900) (1,573) (7,143)
----------------------------------------------
EBITDA after Restructuring (20,282) 1,406 10,259 28,700 20,083
----------------------------------------------
Addback Cash Restructuring* 1,923 1,747 1,900 1,573 7,143
Depreciation & Amortization (9,061) (9,061) (9,061) (9,061) (36,244)
Interest Expense (3,250) (3,243) (3,363) (3,016) (12,872)
Reorganization Items (2,885) (2,883) (3,083) (2,752) (11,603)
----------------------------------------------
Net Income (Loss) (33,555) (12,034) (3,348) 15,444 (33,493)
==============================================
CERTAIN FISCAL 1996 UNAUDITED QUARTERLY ACTUALS AND FOURTH QUARTER
FORECAST
ESTIMATED
QTR1 QTR2 QTR3 QTR4 ANNUAL
Total Sales 349,891 386,195 420,317 463,478 1,619,881
GM $ (prior to GOB reserve) 102,514 107,257 113,060 123,116 445,947
GM % (based on owned sales) 30.5% 29.2% 28.1% 27.5% 28.7%
----------------------------------------------
EBITDA before Restructuring (32,676) (23,092) (2,518) 12,588 (45,698)
----------------------------------------------
Note: EBITDA is earning (loss) before interest expense, income
taxes, non-cash restructuring and non-recurring items, asset
impairment charge, reorganization and extraordinary items, and
depreciation and amortization. At the time cash is received or
expended for restructuring and non-recurring items, the cash
amount will be included in the calculation of EBITDA.
* Related restructuring charge was recorded in a prior year or is
included in reorganization items in fiscal 1997.
10
BRADLEES, INC. EXHIBIT 20
CONDENSED BALANCE SHEET Page 2 of 3
MANAGEMENT FORMAT
($ 000's)
FISCAL 1997 SUMMARY FINANCIAL PLAN
QTR1 QTR2 QTR3 QTR4
----- ----- ----- -----
Assets
Current Assets:
Unrestricted cash & equiv. 1,000 1,000 1,000 1,000
Restrict. cash & equiv. 9,914 10,004 10,094 10,184
------------------------------------
Total cash & cash equiv. 10,914 11,004 11,094 11,184
Inventories 264,229 249,333 328,235 235,822
Other current assets 26,035 30,145 35,893 24,291
------------------------------------
Total Current Assets 301,178 290,482 375,222 271,297
Net Fixed Assets 175,335 173,225 171,116 169,006
Long Term Assets 184,577 182,130 179,683 177,236
------------------------------------
Total Assets 661,090 645,837 726,021 617,539
====================================
Liabilities
Current Liabilities:
Accounts payable 132,115 149,600 196,941 117,911
DIP borrowings 92,454 66,634 100,039 60,362
Other current liabilities 41,782 48,320 52,553 48,806
------------------------------------
Total Current Liabs. 266,351 264,554 349,533 227,079
Long-term cap. lease oblig. 33,150 32,748 32,320 31,868
Other long-term liabilities 47,934 47,934 47,934 47,934
Liabs. subj. to settlement 569,484 568,464 567,444 566,424
Stockholders' Equity (Def.)
Common stock 137,198 137,198 137,198 137,198
Accumulated deficit (393,027)(405,061)(408,408)(392,964)
------------------------------------
Total Stockhld. Eq.(Def.)(255,829)(267,863)(271,210)(255,766)
------------------------------------
Total Liabs.& Equity (Def.) 661,090 645,837 726,021 617,539
====================================
11
BRADLEES, INC. EXHIBIT 20
CONDENSED CASH FLOW Page 3 of 3
MANAGEMENT FORMAT
($ 000's)
FISCAL 1997 SUMMARY FINANCIAL PLAN
QTR1 QTR2 QTR3 QTR4 ANNUAL
----- ----- ----- ----- ------
Beg. unrestr. cash & equiv. 1,000 1,000 1,000 1,000 1,000
Cash from (used in) operations:
Net income (loss) (33,555) (12,034) (3,348) 15,444 (33,493)
Depreciation & amort. 9,061 9,061 9,061 9,061 36,244
Other 579 494 494 494 2,061
Changes in work capital:
Inventory (incr.) decr. (21,852) 14,896 (78,902) 92,413 6,555
A/P increase (decrease) 11,430 17,484 47,342 (79,029) (2,773)
All other (9,631) 2,431 (1,513) 7,856 (857)
----------------------------------------------
Net cash from(used in) op.* (43,968) 32,332 (26,866) 46,239 7,737
Capital spending (5,000) (5,000) (5,000) (5,000) (20,000)
Increase in restricted cash (90) (90) (90) (90) (360)
Other:
Pymts liabs subj to sett. (1,020) (1,020) (1,020) (1,020) (4,080)
Net change in DIP borrow. 52,454 (25,820) 33,405 (39,677) 20,362
Pymts of cap lse & other (2,376) (402) (429) (452) (3,659)
----------------------------------------------
Total other 49,058 (27,242) 31,956 (41,149) 12,623
----------------------------------------------
Incr.(decr.) in unrestricted
cash & cash equivalents 0 0 0 0 0
----------------------------------------------
End. unrest. cash & equiv. 1,000 1,000 1,000 1,000 1,000
----------------------------------------------
* Includes cash outlays associated with reorganization items.
12
