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): March 17, 1998
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(March 17, 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 7 (Including Exhibit)
Item 5: OTHER EVENTS
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Beginning on March 17, 1998, Bradlees, Inc. (the "Company")
will distribute to its banks and other credit providers
summaries of its financial results for the fourth quarter
(thirteen weeks) and fiscal year (fifty-two weeks) ended January
31, 1998 ("Fiscal 1997"), including a comparison to the
Company's summary financial plan (the "Plan") for Fiscal 1997
filed on Form 8-K dated August 13, 1997. The Fiscal 1997
fourth-quarter and annual results compared to the Plan are
attached hereto as Exhibit 20.
Total sales for the fourth quarter ended January 31, 1998
were $10.3 million below Plan. However, comparable store sales
stabilized in the fourth quarter and were unchanged from the
prior year's fourth quarter. EBITDA before restructuring (as
defined in the exhibit) was $45.5 million or $7.8 million above
Plan, due to favorable selling, store operating, administrative
and distribution (SG&A) expenses ($11.2 million) and a $5.6
million gain on sale of an owned closed store, partially offset
by below-plan gross margin ($9.1 million).
The Company took higher-than-planned promotional markdowns
during the Holiday season in an effort to reduce the higher
level of markdowns that might have resulted if such markdowns
were taken after Christmas. In addition, the Company recorded a
non-recurring provision of $2.9 million for excess
going-out-of-business (GOB) markdowns at six closed stores.
SG&A expenses were below Plan due primarily to certain employee
benefit cost reduction initiatives implemented in the fourth
quarter.
The Company reported net income of $25.9 million for this
year's fourth quarter, the second consecutive quarterly net
income, compared to a planned net income of $22.3 million.
Interest and debt expense in the fourth quarter included a
write-off of $1.1 million of deferred financing costs associated
with the prior DIP facility replaced in December, 1997.
Fiscal 1997 total sales were $30.3 million below Plan due,
in part, to shortfalls in menswear sales ($7.8 million) and toy
sales ($8.6 million). In addition, the sales impact of
discontinuing the Company's aggressive promotional strategies of
prior years was difficult to plan with precision. The gross
margin rate prior to the non-recurring GOB provision was 29.8%
in Fiscal 1997 compared to a planned rate of 30.3% and the prior
year rate of 28.4%.
Annual EBITDA before restructuring was $35.1 million or
$6.8 million above Plan as below-Plan SG&A expenses ($14.4
million) and $6.6 million in property gains more than offset the
gross margin shortfall from lower sales. SG&A expenses for
Fiscal 1997 were below plan due primarily to the factors
mentioned above for the fourth quarter and a $3.6 million
reduction in the Company's self-insurance reserves that was
recorded in the third quarter as a result of improved claims
experience.
The Company reported a net loss of $22.6 million for Fiscal
1997 compared to a planned net loss of $33.4 million and the
prior year net loss of $218.8 million.
2
Unrestricted cash was $0.9 million above Plan at January
31, 1998. Inventories were $1.8 million below Plan. Accounts
payable was $4.2 million above Plan and outstanding borrowings
under the Company's DIP facility were $15.5 million above Plan.
The cash proceeds ($8.0 million) from the sale of the owned
closed store 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 August 13, 1997, Form 10-Q for
the first quarter ended May 3, 1997, second quarter ended August
2, 1997, and third quarter ended November 1, 1997, and Form 10-K
for the fiscal year ended February 1, 1997 (fiscal 1996). 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 52 Weeks
Ended January 31, 1998.
3
INDEX TO EXHIBITS
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Exhibit No. Exhibit Page No.
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20 Summary Financial Results for the 13 and 6
52 Weeks Ended January 31, 1998.
4
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: March 17, 1998 By /s/ PETER THORNER
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Peter Thorner
Chairman and
Chief Executive Officer
Date: March 17, 1998 By /s/ CORNELIUS F. MOSES III
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Cornelius F. Moses III
Senior Vice President,
Chief Financial Officer
5
BRADLEES, INC. Exhibit 20
FOURTH QUARTER RESULTS VS. PLAN Page 1 of 2
(In Millions)
Fourth Quarter 1997 Fiscal 1997
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Actual Plan* Last Year Actual Plan* Last Year
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INCOME SUMMARY:
Owned Sales $447.3 $457.0 $448.0 $1,337.6 $1,366.1 $1,553.3
Food Serv Sls 1.9 1.9 1.9 6.8 6.9 8.4
Lease Dept Sls 12.4 13.0 13.1 47.8 49.5 57.7
------------------------ ---------------------------
Total Sales 461.6 471.9 463.0 1,392.2 1,422.5 1,619.4
Gross Margin$ 129.6 138.7 117.9 399.3 413.4 440.7
Non-Recurring
GOB Provision (2.9) - (0.8) (2.9) - (6.6)
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Adj. GM$ 126.7 138.7 117.1 396.4 413.4 434.1
Gross Margin %
(based on owned
sales) 28.3% 30.3% 26.1% 29.6% 30.3% 27.9%
SG&A Expenses (93.1) (104.3)(111.6) (382.9) (397.3) (504.0)
Other Income 3.4 3.3 3.1 12.1 12.0 13.8
Gain on
Disposition of
Properties 5.6 - 1.7 6.6 0.2 3.4
Add back Non-
Recurring
GOB Provision 2.9 - 0.8 2.9 - 6.6
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EBITDA before
Restructuring 45.5 37.7 11.1 35.1 28.3 (46.1)
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Cash Impact
from
Restructuring (1.5) (0.8) (10.2) (7.2) (8.3) (19.3)
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EBITDA after
Restructuring 44.0 36.9 0.9 27.9 20.0 (65.4)
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Add back Cash
Impact from
Restructuring 1.5 0.8 10.2 7.2 8.3 19.3
Less Gain on
Dispos. of Prop.
(in Reorg.
Items) (0.2) - (1.7) (1.1) (0.2) (1.7)
Less Non-Recurring
GOB Provision (2.9) - (0.8) (2.9) - (6.6)
Depreciation &
Amort. Exp. (8.7) (9.1) (10.1) (36.3) (37.0) (42.3)
Interest and
Debt Expense (4.9) (3.4) (3.7) (16.6) (14.7) (11.5)
Asset Impairment
Charge - - (40.8) - - (40.8)
Reorganization
Items (2.9) (2.9) (13.2) (0.8) (9.8) (69.8)
------------------------ ---------------------------
Net Inc(Loss) $25.9 $22.3 ($59.2) ($22.6) ($33.4) ($218.8)
======================== ===========================
BALANCE SHEET SUMMARY:
- ---------------------- Balance at End of Period
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Unrestricted Cash and Cash Equivalents $10.9 $10.0 $10.0
Restricted Cash and Cash Equivalents 16.8 9.5 9.1
Inventories 238.6 240.4 236.9
Other Current Assets 26.5 23.1 25.2
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Total Current Assets 292.8 283.0 281.2
Net Fixed Assets 150.5 153.6 163.6
Long-Term Assets 151.9 151.7 159.4
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Total Assets $595.2 $588.3 $604.2
=========================
Accounts Payable $124.4 $120.2 $115.3
DIP Borrowings 84.2 68.7 $42.5
Other Current Liabilities 38.1 48.6 54.7
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Total Current Liabilities 246.7 237.5 212.5
Long-Term Liabilities 72.3 83.0 83.9
Liabilities Subject to Settlement 562.1 564.5 571.0
Paid-in-Capital 137.2 137.3 137.3
Accumulated Deficit (423.1) (434.0) (400.5)
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Stockholders' Equity (Deficiency) (285.9) (296.7) (263.2)
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Total Liabs. and Stockholders'
Equity (Deficiency) $595.2 $588.3 $604.2
=========================
* As filed on Form 8-K dated August 13,1997 and adjusted for
bank service charges reclassified from SG&A expenses to interest
and debt expense.
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.
6
Exhibit 20
Page 2 of 2
BRADLEES, INC.
FOURTH QUARTER RESULTS VS. PLAN
(Unaudited)
(In Millions)
Fourth Quarter 1997 Fiscal 1997
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Actual Plan* Actual Plan*
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CASH FLOW SUMMARY:
Beginning Unrestricted
Cash & Cash Equivalents $11.3 $10.0 $10.0 $10.0
Cash Used in Operations:
Net Income (Loss) 25.9 22.3 (22.6) (33.4)
Depreciation &
Amortization Expense 8.7 9.1 36.3 37.0
Amortization of Deferred
Financing Costs 1.6 0.5 3.7 2.5
Inventory Dec.(Inc.) 96.6 90.4 (1.8) (3.4)
Accounts Pay.Inc.(Dec.) (71.9) (88.2) 9.0 4.9
All Other, Including
Reorganization Items (6.3) 7.9 (34.0) (3.6)
------------------- -------------------
Net Cash Provided by
(Used in) Operations 54.6 42.0 (9.4) 4.0
Capital Spending (4.9) (5.0) (19.6) (20.0)
Inc. in Restricted
Cash and Cash
Equivalents (7.3) (0.1) (7.6) (0.4)
Other:
Payments of Capital
Leases & Deferred
Financing Costs (2.4) (0.5) (5.7) (3.5)
Proceeds on Sales
of Assets 8.0 - 8.0 -
Payments of Liabilities
Subject to Settlement (1.1) (1.0) (6.5) (6.4)
Net Borrowings (Payments)
Under the DIP Facility (47.3) (35.4) 41.7 26.2
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Total Other (42.8) (36.9) 37.5 16.3
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Increase (Decrease) in
Unrestricted Cash and
Cash Equivalents (0.4) 0.0 0.9 -
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Ending Unrestricted
Cash and Cash
Equivalents $10.9 $10.0 $10.9 $10.0
=================== ====================
* As filed on Form 8-K dated August 13, 1997.
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