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): Feb. 11, 1998
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Feb. 11, 1998
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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)
(781) 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 8 (Including Exhibit)
Item 5: OTHER EVENTS
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Beginning on February 11, 1998, 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 30, 1999 ("fiscal 1998"). The Plan
is attached hereto as Exhibit 20 and does not incorporate any
adjustments that would result from the Company's expected
mid-year emergence from Chapter 11. The Company expects that it
will file a new financial plan at that time that would
incorporate any such adjustments.
The Plan reflects an EBITDA (as defined in exhibit 20) for
fiscal 1998 of $32.0 million before restructuring outlays and
property gains, an improvement of approximately $4.5 million or
16% from forecasted EBITDA for the fiscal year ended January 31,
1998 ("fiscal 1997"). Final audited fiscal 1997 results are
expected to be released by late March, 1998.
The Company believes it can achieve the planned improvement
in operating results primarily through a comparable store sales
increase of 3.5%, an increase of 0.3% in the gross margin rate,
and the current closings of 6 underperforming stores (the Plan
is based on 103 stores after the closing of the six stores in
February, 1998). Selling, general, distribution and
administrative ("SG&A") expenses for fiscal 1998 are planned
down $2 million and flat as a percentage of net sales compared
to forecasted fiscal 1997 SG&A expenses. Since September, 1996,
the Company has implemented expense-reduction initiatives that
have generated approximately $100 million in savings on a
comparable-store basis (i.e. excluding cost savings arising from
store closings).
The Company's business strategy is being focused on three
key merchandise categories (moderately priced apparel for the
family, home goods and selected hardlines goods). Management is
committed to improving quality and fashion (especially in
apparel and home goods) and to improving customer service as a
way to differentiate itself from its closest competition. The
Company believes that it can leverage its strength in apparel
and home goods while driving traffic with selected hardlines
merchandise.
The Company made the following key modifications to its
business strategy during fiscal 1997: (a) reintroduced lower
opening price points in selective merchandise categories to
enhance value, increase customer traffic and avoid costly
promotions; (b) reintroduced certain basic convenience and
commodity products that are typical of assortments carried by
discount stores; (c) reinstituted a layaway program and
installed new in-store directional and departmental signage in
the second half of 1997; (d) revised the Company's markdown
policy based on product rate of sale; (e) made the weekly
circulars more item-intensive and price-point oriented with
clear presentation while reducing less productive and more
costly advertising media; (f) introduced in the second half of
fiscal 1997 both a "Certified Value" program that highlights
certain key recognizable items at competitive everyday prices
and a "Wow!" program which integrates targeted and unadvertised
opportunistic purchases; and (g) improved 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 1, 1997 and Form 10-K for the fiscal year
ended February 1, 1997 (fiscal 1996). 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
1997 forecast were not examined, reviewed or compiled by the
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Company's independent public accountants. The Company is not
obligated to update the Plan or the fiscal 1997 forecast to
reflect subsequent events or developments. The Plan and the
fiscal 1997 forecast are subject to future adjustments, if any,
that could materially affect such information.
The Plan and the fiscal 1997 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 1997 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) 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 1997 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 1997 forecast.
Item 7: FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND
EXHIBITS
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Exhibit: 20 Fiscal 1998 Summary Financial Plan
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INDEX TO EXHIBITS
Exhibit No. Exhibit Page No.
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20 Fiscal 1998 Summary Financial Plan 6
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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: February 11, 1998 By /s/ PETER THORNER
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Peter Thorner
Chairman and
Chief Executive Officer
Date: February 11, 1998 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
CONDENSED INCOME STATEMENT Page 1 of 3
MANAGEMENT FORMAT
($ 000's)
FISCAL 1998 SUMMARY FINANCIAL PLAN
QTR1 QTR2 QTR3 QTR4 ANNUAL
---- ---- ---- ---- ------
Owned Sales $265,161 $298,000 $327,500 $439,312 $1,329,973
Food Serv. Sales 1,541 1,715 1,687 1,760 6,703
Leased Dept. Sales 9,233 13,797 11,964 12,238 47,232
------- ------- ------- ------- ---------
Total Sales 275,935 313,512 341,151 453,310 1,383,908
Gross Margin $ 76,239 95,129 97,599 131,033 400,000
Gross Margin %
(based on
owned sales) 28.8% 31.9% 29.8% 29.8% 30.1%
SG&A Expenses (93,165) (94,305) (93,967) (99,292) (380,729)
Other Income 2,548 3,527 3,244 3,426 12,745
------- ------- ------- ------- ---------
EBITDA (Loss)
before
Restruct.(a) ($14,378) $4,351 $6,876 $35,167 $32,016
------- ------- ------- ------- ---------
Cash Impact from
Restructuring * (1,601) (344) (149) (91) (2,185)
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EBITDA (Loss)
after
Restructuring ($15,979) $4,007 $6,727 $35,076 $29,831
------- ------- ------- ------- ---------
Add back Cash
Impact from
Restucturing * 1,601 344 149 91 2,185
Depr.& Amort.
Expense (9,020) (8,802) (8,502) (8,141) (34,465)
Interest and
Debt Expense (3,738) (4,014) (4,612) (4,403) (16,767)
Reorg.Items (2,123) (2,080) (2,060) (2,058) (8,321)
------- ------ ------ ------ ---------
Net Income(Loss) ($29,259)($10,545) ($8,298) $20,565 ($27,537)
======= ======= ====== ======= =========
CERTAIN FISCAL 1997 UNAUDITED QUARTERLY ACTUALS
AND FOURTH QUARTER FORECAST
ESTIMATED
QTR1 QTR2 QTR3 QTR4 ANNUAL
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Total Sales $276,837 $311,509 $342,339 $463,342 $1,394,027
Gross Margin $
(prior to GOB res.) 79,658 92,936 97,106 128,971 398,671
Gross Margin %
(based on owned sls) 30.0% 31.4% 29.5% 28.7% 29.8%
-------- ------- ------- ------- ---------
EBITDA (Loss) before
Restructuring &
Property Gains(a) ($16,780) ($2,054) $7,411 $38,951 $27,528
======== ======= ====== ======= =========
Note: EBITDA before restructuring is earning (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.
(a) No property gains (which are allowed to be included in
EBITDA) have been assumed to occur in fiscal 1998. Estimated
property gains totaled $6.7 million in fiscal 1997.
* Related restructuring charges were recorded prior to fiscal
1998.
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BRADLEES, INC. EXHIBIT 20
CONDENSED BALANCE SHEET Page 2 of 3
MANAGEMENT FORMAT
($ 000's)
FISCAL 1998 SUMMARY FINANCIAL PLAN
QTR1 QTR2 QTR3 QTR4
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Assets
Current Assets:
Unrestricted cash &
cash equivalents $9,000 $10,000 $11,300 $8,835
Restricted cash 16,943 24,953 25,143 25,334
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Total cash & cash
equivalents 25,943 34,953 36,443 34,169
Inventories 254,749 244,336 326,628 224,607
Other current assets 26,689 18,582 23,452 15,899
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Total Current Assets 307,381 297,871 386,523 274,675
Net Fixed Assets 145,971 143,962 142,253 140,906
Long-Term Assets 151,245 149,101 146,957 144,813
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Total Assets $604,597 $590,934 $675,733 $560,394
======= ======= ======= =======
QTR1 QTR2 QTR3 QTR4
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Liabilities
Current Liabilities:
Accounts payable $114,637 $109,951 $163,314 $101,073
DIP borrowings 129,296 135,276 184,980 106,953
Other current liabs. 49,260 46,158 37,497 43,171
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Total Current Liabs. 293,193 291,385 385,791 251,197
Long-term capital
lease obligations 26,795 26,505 26,216 25,926
Other long-term liabs. 38,277 38,277 38,277 38,277
Liabilities subject
to settlement 561,090 560,070 559,050 558,030
Stockholders' Equity
(Deficit)
Common stock 137,302 137,302 137,302 137,302
Accumulated deficit (452,060)(462,605)(470,903) (450,338)
------- ------- ------- -------
Total Stockholders'
Equity (Deficit) (314,758)(325,303)(333,601) (313,036)
------- ------- ------- -------
Total Liabilities
& Equity (Deficit) $604,597 $590,934 $675,733 $560,394
======= ======= ======= =======
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BRADLEES, INC. EXHIBIT 20
CONDENSED CASH FLOW Page 3 of 3
MANAGEMENT FORMAT
($ 000's)
FISCAL 1998 SUMMARY FINANCIAL PLAN
QTR1 QTR2 QTR3 QTR4 ANNUAL
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Beginning unrestricted
cash & cash equivalents $9,500 $9,000 $10,000 $11,300 $9,500
Cash generated from
(used in) operations:
Net income (loss) (29,259) (10,545) (8,298) 20,565 (27,537)
Depreciation &
amort. expense 9,020 8,802 8,502 8,141 34,465
Amort. of deferred
financing costs 351 350 350 350 1,401
Inventory (incr.)decr. (18,383) 10,413 (82,292) 102,021 11,759
Accts pay. incr.(decr.) 9,421 (4,686) 53,363 (62,241) (4,143)
All other * (4,282) 5,006 (13,532) 13,227 419
------- ------- ------- ------ ----
Net cash provided
by (used in) opers.* (33,132) 9,340 (41,907) 82,063 16,364
Investing activities:
Capital spending (5,000) (5,000) (5,000) (5,000) (5,000)
Incr. in rest. cash (128) (8,010) (190) (191) (8,519)
Financing activities:
Payments of liabs.
subject to settlement (1,020) (1,020) (1,020) (1,020) (4,080)
Net change in
DIP borrowings 39,248 5,981 49,704 (78,027) 16,906
Payments of capital
leases & deferred
financing costs (468) (291) (287) (290) (1,336)
------- ------- ------- ------- ------
Total financing
activities 37,760 4,670 48,397 (79,337) 11,490
------- ------- ------- ------- ------
Incr.(decr.) in
unrestricted cash
& cash equivalents (500) 1,000 1,300 (2,465) (665)
------- ------- ------- ------- -----
Ending unrestricted
cash & cash equivalents $9,000 $10,000 $11,300 $8,835 $8,835
====== ======= ======= ====== ======
* Includes cash outlays associated with reorganization items.
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