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): August 22, 1997
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(August 22, 1997)
Bradlees, Inc.
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(Exact Name of Registrant As Specified In Its Charter)
Massachusetts
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(State Or Other Jurisdiction of Incorporation)
1-11134 04-3156108
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(Commission File Number) (IRS Employer Identification No.)
One Bradlees Circle; Braintree, Massachusetts 02184
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(Address Of Principal Executive Offices) (Zip Code)
(617) 380-3000
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(Registrant's telephone number, including area code)
Not Applicable
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(Former name or former address, if changed since last report)
Exhibit Index on Page 4
Page 1 of 7 (Including Exhibit)
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Item 5: OTHER EVENTS
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Beginning on August 22, 1997, Bradlees, Inc. (the
"Company") will distribute to its banks and other credit
providers summaries of its unaudited financial results for the
second quarter (thirteen weeks) and year-to-date (twenty-six
weeks) ended August 2, 1997, including a comparison to the
Company's summary financial plan (the "Plan") for the fiscal
year ending January 31, 1998 ("Fiscal 1997") filed on Form 8-K
dated January 28, 1997. The Fiscal 1997 second-quarter results
compared to the Plan are attached hereto as Exhibit 20.
Beginning with the third-quarter results, the Company will
compare its Fiscal 1997 results against the revised financial
plan filed on Form 8-K dated August 13, 1997.
Total sales for the second quarter ended August 2, 1997
were $23.6 million below Plan. EBITDA before restructuring (as
defined in the exhibit) was $5.1 million below Plan, primarily
due to the unfavorable sales variance, partially offset by
favorable selling, store operating, administrative and
distribution (SG&A) expenses. The unfavorable sales variance
in the second quarter was due, in part, to the unseasonably cool
weather through the first week of June, relatively low
inventories of seasonal merchandise (a result of a strong June
sales rebound following a reduction in merchandise receipts in
response to disappointing May sales), and the fact that many of
the previously reported initiatives to improve sales had yet to
be fully implemented. SG&A expenses were $2.6 million below
Plan due primarily to favorable logistics ($0.6 million),
benefits ($1.0 million) and home office ($1.0 million)
variances.
Year-to-date total sales were $43.8 million below Plan.
Year-to-date EBITDA before restructuring was only $3.4 million
below Plan, however, as an above-Plan gross margin rate (30.7%
vs. 30.0%) and below-Plan SG&A expenses ($5.4 million) partially
offset the impact from the lower sales. The below-Plan sales
were due, in part, to the factors discussed above for the
second-quarter sales variance. The favorable gross margin rate
was due primarily to better-than-anticipated vendor margin and
advertising support. Year-to-date SG&A expenses were favorable
primarily in logistics ($2.0 million), home office ($1.3
million) and occupancy ($0.7 million).
Unrestricted cash was $9.9 million above Plan at August
2, 1997. Inventories were $4.7 million above Plan, primarily
in toys because of advance purchase programs. Accounts payable
was $10.2 million below Plan and outstanding borrowings under
the Company's DIP facility were $22.4 million above Plan. This
was due, in part, to an assumed rate of inventory leverage in
the Plan that did not contemplate changes in the vendor mix as a
consequence of the reintroduction of certain merchandise
categories and the related reduction in accounts payable from
the shorter credit terms that ensued.
The Company is distributing the quarterly performance
against its Plan (the "Plan Performance Information") to its
banks and other credit providers to facilitate their credit
analyses. THE PLAN PERFORMANCE INFORMATION SHOULD NOT BE RELIED
UPON FOR ANY OTHER PURPOSE and should be read in conjunction
with the Company's Form 8-K dated January 28, 1997, Form 10-Q
for the first quarter ended May 3, 1997, and Form 10-K for the
fiscal year ended February 1, 1997 (fiscal 1996). The Plan
Performance
2
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Information 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 Performance Information, the
Company does not believe it is obligated to provide such
information indefinitely, and the Company may cease making such
disclosures and updates at any time. The Plan Performance
Information was not examined, reviewed or compiled by the
Company's independent public accountants. The Company is not
obligated to update the Plan Performance Information to reflect
subsequent events or developments. The Plan Performance
Information is subject to future adjustments, if any, that could
materially affect such information.
Item 7: FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION
AND EXHIBITS
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Exhibit: 20 Summary Financial Results for the
13 and 26 Weeks Ended August 2, 1997.
3
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INDEX TO EXHIBITS
Exhibit No. Exhibit Page No.
- ----------- -------- --------
20 Summary Financial Results for the
13 and 26 Weeks Ended August 2, 1997. 6
4
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BRADLEES, INC.
AND SUBSIDIARIES
SIGNATURES
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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: August 26, 1997 By /s/ PETER THORNER
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Peter Thorner
Chairman and
Chief Executive Officer
Date: August 26, 1997 By /s/ CORNELIUS F. MOSES III
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Cornelius F. Moses III
Senior Vice President,
Chief Financial Officer
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BRADLEES, INC. Exhibit 20
SECOND QUARTER RESULTS VS. PLAN Page 1 of 2
(Unaudited)
(In Millions)
Second Quarter 1997 Year-to-Date 1997
Actual Plan Last Yr. Actual Plan Last Yr.
------ ---- ------- ------ ---- --------
INCOME SUMMARY:
Owned Sales $295.7 $318.6 $367.3 $561.6 $603.1 $702.9
Food Service Sales 1.7 1.8 2.3 3.2 3.4 4.4
Leased Dept Sales 14.1 14.7 16.6 23.5 25.6 28.8
----- ----- ----- ----- ----- -----
Total Sales 311.5 335.1 386.2 588.3 632.1 736.1
Gross Margin $ 92.9 100.4 107.3 172.6 181.0 209.8
Non-Recurring GOB
Reserve - - (5.9) - - (5.9)
---- ----- ----- ----- ----- -----
Adjusted Gross Margin 92.9 100.4 101.4 172.6 181.0 203.9
Gross Margin %
(based on owned sales) 31.4% 31.5% 27.6% 30.7% 30.0% 29.0%
SG&A Expenses (98.1)(100.7)(134.3) (196.9)(202.3)(272.5)
Other Income 3.1 3.4 3.9 5.5 6.1 6.9
Gain on Disposition
of Property 0.1 - - 0.2 - -
Add back Non-Recurring
GOB Reserve - - 5.9 - - 5.9
------- ------ ------ ------ ------ ------
EBITDA before
Restructuring (2.0) 3.1 (23.1) (18.6) (15.2) (55.8)
------- ------ ------ ------ ------ ------
Cash Impact from
Restructuring (1.7) (1.7) (2.0) (3.3) (3.7) (4.6)
------- ------ ------ ------ ------ ------
EBITDA after
Restructuring (3.7) 1.4 (25.1) (21.9) (18.9) (60.4)
------- ------ ------ ------ ------ ------
Add back Cash Impact
from Restructuring 1.7 1.7 2.0 3.3 3.7 4.6
Less Gain on Dispos.of
Property
(in Reorg.Items) (0.1) - - (0.2) - -
Less Non-Recurring
GOB Reserve - - (5.9) - - (5.9)
Depreciation &
Amortization Exp. (9.0) (9.1) (10.5) (18.2) (18.1) (21.5)
Interest and Debt
Expense (3.7) (3.2) (2.4) (7.0) (6.5) (4.9)
Reorganization Items (2.1) (2.8) (40.9) (4.8) (5.8) (48.4)
------- ------ ------ ------ ------ ------
Net Loss ($16.9)($12.0)($82.8)($48.8)($45.6)($136.5)
====== ====== ====== ====== ====== =======
BALANCE SHEET SUMMARY: Balance at End of Period
- --------------------- -------------------------
Unrestricted Cash & Cash Equivalents $10.9 $1.0 $17.3
Restricted Cash & Cash Equivalents 9.3 10.0 7.4
Inventories 254.0 249.3 256.4
Other Current Assets 27.1 30.2 32.4
------- ------ -------
Total Current Assets 301.3 290.5 313.5
Net Fixed Assets* 159.7 173.2 175.7
Long Term Assets* 156.2 182.1 195.9
------- ------- ------
Total Assets $617.2 645.8 $685.1
======== ======= =======
Accounts Payable $139.4 $149.6 $147.2
DIP Borrowings 89.0 66.6 -
Other Current Liabilities 50.7 48.3 51.5
------- ------- -------
Total Current Liabilities 279.1 264.5 198.7
Long-Term Liabilities 82.8 80.7 97.7
Liabilities Subject to Settlement 567.4 568.5 570.0
Paid-in-Capital 137.3 137.2 137.0
Accumulated Deficit* (449.4) (405.1) (318.3)
------- ------- -------
Total Stockholders'Equity(Deficiency) (312.1) (267.9) (181.3)
------- ------- -------
Total Liabilities and Stockholders'
Equity (Deficiency) $617.2 $645.8 $685.1
======== ======== =======
* Actual 1997 balances are after the 1996 year-end FAS#121
write-downs that were not included in the plan.
NOTE: EBITDA before restructuring is earnings (loss) before
interest and debt expense, income taxes, restructuring and
non-recurring items, asset impairment charge, reorganization and
extraordinary items, and depreciation and amortization expense.
At the time cash is received or expended for restructuring and
non-recurring items, the cash amount is included in the
calculation of EBITDA after restructuring.
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Exhibit 20
Page 2 of 2
BRADLEES, INC.
SECOND QUARTER RESULTS VS. PLAN
(Unaudited)
(In Millions)
Second Quarter 1997 Year-to-Date
Actual Plan Actual Plan
------ ------ ------ -----
CASH FLOW SUMMARY:
Beginning Unrestricted Cash &
Cash Equivalents $12.2 $1.0 $10.0 $1.0
Cash Used in Operations:
Net Loss (16.9) (12.0) (48.8) (45.6)
Deprec. & Amort. Expense 9.0 9.1 18.2 18.1
Amort. of Deferred Financing
Costs 0.8 0.5 1.6 1.1
Inventory (Increase) Decrease 0.6 14.9 (17.1) (7.0)
Accounts Payable Increase 6.2 17.4 24.1 28.9
All Other,Including Reorg.Items (1.0) 2.4 (6.4) (7.2)
----- ---- ------ ------
Net Cash Provided by (Used in)
Operations (1.3) 32.3 (28.4) (11.7)
Capital Spending (7.0) (5.0) (10.9) (10.0)
Increase in Restricted Cash &
Cash Equivalents (0.1) (0.1) (0.2) (0.2)
Other:
Payments of Capital Leases
& Deferred Financing Costs (0.4) (0.4) (2.6) (2.8)
Payments of Liabilities
Subject to Settlement (1.0) (1.0) (3.5) (2.0)
Net Borrowings (Payments)
under the DIP Facility 8.5 (25.8) 46.5 26.7
---- ------ ---- ----
Total Other 7.1 (27.2) 40.4 21.9
------ ------ ------ ------
Increase (Decrease) in
Unrestricted Cash &
Cash Equivalents (1.3) - 0.9 -
------ ------ ------ ------
Ending Unrestricted Cash
and Cash Equivalents $10.9 $1.0 $10.9 $1.0
====== ====== ====== =====
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