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):
September 1,1998
(September 1,1998)
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)
(781) 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 4
Page 1 of 7 (Including Exhibit)
Item 5: OTHER EVENTS
Beginning on September 1, 1998, Bradlees, Inc. (the "Company")
will distribute to its banks and other credit providers
summaries of its second quarter (thirteen weeks) and
year-to-date (twenty-six weeks) financial results ended August
1, 1998, including a comparison to the Company's summary
financial plan (the "Plan") for the fiscal year ending January
30, 1999 ("Fiscal 1998") filed on Form 8-K dated February 11,
1998. The Fiscal 1998 second quarter and year-to-date results
compared to the Plan are attached hereto as Exhibit 20.
Total sales for the second quarter ended
August 1, 1998 were $9.3 million or 3.0% above Plan due
primarily to the favorable customer response to the
merchandising and marketing initiatives begun in 1997. Both
softlines and hardlines sales exceeded Plan. Comparable store
sales increased 7.4% in the second quarter. EBITDA before
restructuring (as defined in the exhibit) exceeded Plan by $4.9
million due to the above-Plan sales and associated gross margin,
favorable selling, store operating, administrative and
distribution (SG&A) expenses, and a gain on sale of a closed
store, partially offset by unfavorable other income that
resulted from below-Plan leased (shoe) department sales. The
gross margin rate was below Plan in the second quarter due
primarily to a slightly lower initial markup and above-Plan
promotional markdowns. SG&A expenses were below Plan due
principally to favorable store operating and advertising
expenses.
Year-to-date total sales were $26.7 million
or 4.5% above Plan and year-to-date comparable store sales
increased 8.6% for the same reasons mentioned above. Both
softlines and hardlines sales exceeded the year-to-date Plan and
prior-year sales. Year-to-date EBITDA before restructuring was
$8.8 million better than Plan due to the above-Plan sales and
associated gross margin, favorable SG&A expenses, and a gain on
disposition of properties, partially offset by below-Plan
other income. The year-to-date gross margin rate was below Plan due
principally to the same reasons as discussed above for the
second quarter. Year-to-date SG&A expenses were below Plan
mostly due to favorable home office, advertising and store
operating expenses.
The Company reported a net loss of $2.7
million for this year's second quarter, compared to a planned
net loss of $10.5 million and last year's second quarter net
loss of $16.9 million. The year-to-date net loss was $27.4
million compared to a planned year-to-date net loss of $39.8
million and the prior year-to-date net loss of $48.8 million.
Unrestricted cash was $1.9 million
below Plan at August 1, 1998. Inventories were $4.8 million
below Plan. Accounts payable was $11.2 million above Plan and
outstanding borrowings under the Company's DIP facility were
$23.7 million below Plan. Net cash proceeds of $3.5 million
from the unplanned sale of a closed store in the second quarter
were paid to the associated SPE ("special purpose entity")
finance group. In the first quarter, net cash proceeds of $7.6
million from the sale of an undeveloped property that was
planned to occur in the second quarter were placed into
restricted cash and cash equivalents.
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 February 11, 1998, Form 10-Q for the first and
second quarters ended May 2, 1998 and August 1, 1998,
respectively, and Form 10-K for the fiscal year ended January
31, 1998 (fiscal 1997). The Plan Performance 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
Exhibit 20
Summary Financial Results for the 13 and 26 Weeks
Ended August 1, 1998.
INDEX TO EXHIBITS
Exhibit No. Exhibit Page No.
20 Summary Financial Results for the 13 and 26 Weeks 6
Ended August 1, 1998.
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: September 1, 1998 By /s/ PETER THORNER
Peter Thorner
Chairman and
Chief Executive Officer
Date: September 1, 1998 By /s/ CORNELIUS F. MOSES III
Cornelius F. Moses III
Senior Vice President, Chief
Financial Officer
BRADLEES, INC. Exhibit 20
SECOND QUARTER RESULTS VS. PLAN Page 1 of 2
(Unaudited)
(In Millions)
Second Quarter 1998 Year-to-Date 1998
Actual Plan* Last Yr Actual Plan* Last Year
INCOME SUMMARY:
Owned Sales $308.8 $298.0 $295.7 $591.2 $563.2 $561.6
Food Serv. Sales 1.6 1.7 1.7 3.0 3.2 3.2
Leased Sales 12.4 13.8 14.1 21.9 23.0 23.5
----- ----- ----- ----- ----- -----
Total Sales 322.8 313.5 311.5 616.1 589.4 588.3
Gross Margin $ 96.6 95.1 92.9 176.3 171.4 172.6
Gross Margin %
(based on
owned sales) 31.3% 31.9% 31.4% 29.8% 30.4% 30.7%
SG&A Expenses (92.3) (94.3) (97.7) (184.8)(187.5) (196.0)
Other Income 3.0 3.5 3.1 5.7 6.1 5.4
Gain on Dispos.
of Properties 1.9 - 0.1 1.6 - 0.2
------ ----- ----- ----- ------ ----
EBITDA before
Restructuring 9.2 4.3 (1.6) (1.2) (10.0) (17.8)
------ ------ ------ ----- ----- -----
Cash Impact from
Restructuring (0.6) (0.3) (1.7) (2.6) (2.0) (3.3)
------ ------ ------ ----- ----- ----
EBITDA after
Restructuring 8.6 4.0 (3.3) (3.8) (12.0) (21.1)
------ ------ ------ ----- ----- -----
Add back Cash Impact
from Restruct. 0.6 0.3 1.7 2.6 2.0 3.3
Less Gain on Dispos.
of Properties
(in Reorg.Items) (1.9) - (0.1) (1.9) - (0.2)
Depreciation &
Amortization Exp.(8.0) (8.8) (9.2) (16.5) (17.8) (18.5)
Interest and
Debt Expense (3.9) (4.0) (3.9) (7.6) (7.8) (7.5)
Reorganization
Items 1.9 (2.0) (2.1) (0.2) (4.2) (4.8)
------ ------ ----- ----- ------ ------
Net Loss ($2.7) ($10.5)($16.9) ($27.4)($39.8) ($48.8)
====== ======= ====== ====== ======= =======
BALANCE SHEET SUMMARY:
Balance at End of Period
------------------------
Unrestricted Cash
and Cash Equivalents $8.1 $10.0 $10.9
Restricted Cash and Cash Equivalents 24.9 25.0 9.3
Inventories 239.5 244.3 254.0
Other Current Assets 16.1 18.6 27.1
----- ----- -----
Total Current Assets 288.6 297.9 301.3
Net Fixed Assets 142.8 143.9 159.7
Long Term Assets 143.9 149.1 156.2
----- ----- -----
Total Assets $575.3 $590.9 $617.2
====== ====== ======
Accounts Payable $121.2 $110.0 $139.4
DIP Borrowings 111.6 135.3 89.0
Other Current Liabilities 31.8 37.1 50.7
----- ----- -----
Total Current Liabilities 264.6 282.4 279.1
Long-Term Liabilities 69.6 73.8 82.8
Liabilities Subject to Settlement 554.4 560.0 567.4
Paid-in-Capital 137.1 137.3 137.3
Accumulated Deficit (450.4)(462.6)(449.4)
----- ----- -----
Total Stockholders' Equity
(Deficiency) (313.3)(325.3)(312.1)
------ ----- -----
Total Liabilities and
Stockholders' Equity (Deficiency) $575.3 $590.9 $617.2
====== ====== ======
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.
* Plan amounts are from the Form 8-K dated February 11, 1998
with reclassifications between other current and long-term
liabilities to be consistent with this year's actual
presentation.
BRADLEES, INC. Exhibit 20
SECOND QUARTER RESULTS Page 2 of 2
(Unaudited)
(In Millions)
Second Quarter Year-to-Date
Actual Plan* Actual Plan*
CASH FLOW SUMMARY:
Beginning Unrestricted Cash &
Cash Equivalents $10.3 $9.0 $10.9 $9.5
Cash Used in Operations:
Net Loss (2.7)(10.5) (27.4)(39.8)
Depreciation & Amortization Exp. 8.0 8.8 16.5 17.8
Amortization of Deferred
Financing Costs 0.4 0.3 0.8 0.7
Inventory (Increase) Decrease 21.4 10.4 (0.8) (8.0)
Accounts Payable Increase(Decr.) (19.9) (4.7) (3.2) 4.7
All Other ** (0.5) (2.8) (8.7) (7.0)
----- ---- ------ -----
Net Cash Provided by (Used in)
Operations 6.7 1.5 (22.8)(31.6)
Investing Activities:
Capital Spending (3.9) (5.0) (5.5)(10.0)
Increase in Restricted Cash
and Cash Equivalents (0.3) (8.0) (8.1) (8.1)
Financing Activities:
Payments of Capital Leases
& Deferred Financing Costs (0.3) (0.3) (0.6) (0.8)
Proceeds from Disposition of
Properties 4.2 7.8 12.0 7.8
Payments of Liabilities Subject
to Settlement (4.1) (1.0) (5.2) (2.0)
Net Borrowings (Payments)
under the DIP Facility (4.5) 6.0 27.4 45.2
----- ---- ----- ----
Total Financing Activities (4.7) 12.5 33.6 50.2
----- ---- ---- ----
Increase(Decr.) in Unrestricted
Cash and Cash Equivalents (2.2) 1.0 (2.8) 0.5
----- ---- ----- ----
Ending Unrestricted Cash and
Cash Equivalents $8.1 $10.0 $8.1 $10.0
==== ===== ===== ====
* Plan amounts are from the Form 8-K dated February 11,1998 with
a reclassicication of planned proceeds from dispositon of
properties from "All Other" to "Financing Activities" to be
consistent with this year's actual presentation.
** Includes cash outlays associated with reorganization items.
