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): April 1, 1999
(April 1, 1999)
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 10(Including Exhibits)
Item 5: OTHER EVENTS
Beginning on
April 1, 1999, Bradlees, Inc. (the "Company") will distribute to
its banks and other credit providers summaries of its fourth
quarter (thirteen weeks) and annual (fifty-two weeks) financial
results ended January 30, 1999 ("fiscal 1998"), including a
comparison to the Company's fiscal 1998 summary financial
forecast (the "Forecast") and plan (the "1998 Plan"). Also
beginning on April 1, 1999, the Company will distribute to its
banks and other credit providers its financial plan (the "1999
Plan") for the fiscal year ending January 29, 2000 ("fiscal
1999"). The 1999 Plan is attached hereto as Exhibit 20A and
incorporates the impact of the Company's emergence from Chapter
11 and adoption of fresh-start reporting as of the end of
fiscal 1998 (January 30, 1999). The fiscal l998 fourth-quarter
and annual results compared to the Forecast and 1998 Plan are
attached hereto as Exhibit 20B.
The 1999 Plan projects an EBITDA (as defined in Exhibit 20A) for
fiscal 1999 of $40.0 million, an improvement of approximately
$7.6 million from EBITDA for fiscal 1998 presented in Exhibit
20A. The Company has planned improvements in its operating
results primarily through a comparable store sales increase of
5.1% and an increase of 0.5% in the gross margin rate. The
projected increase in comparable store sales is premised
primarily on anticipated sales gains from continued expansion of
the successful merchandising and marketing initiatives started
in 1997 and from a reduction in competition resulting from the
current liquidation of one of the Company's major competitors
(Caldor Corp.). The projected increase in the gross margin rate
is based primarily on improved inventory and markdown controls
and on continued expansion of initiatives such as the "Certified
Value" program that highlights certain key recognizable items at
competitive everyday prices and the "Wow!" program which
integrates targeted and unadvertised opportunistic purchases.
The 1999 Plan is based on 102 stores after the closing of the
Peabody, MA store in March. Selling, general, distribution and
administrative ("SG&A") expenses for fiscal 1999 are planned to
increase slightly but decline as a percentage of net sales
compared to fiscal 1998 SG&A expenses. Since September, 1996,
the Company has implemented expense-reduction initiatives that
have generated well over $100 million in savings on a
comparable-store basis (i.e. excluding cost savings arising from
store closings).
The Company is focusing on three core product lines:
moderately-priced basic and casual apparel, basic and fashion
items for the home, and edited assortments of frequently
purchased commodity and convenience products. Bradlees is
committed to superior customer service, as well as quality and
fashion, especially in apparel and home furnishings. The
Company believes that it can strategically leverage its strength
in the fashion and quality content of its apparel and decorative
home product offerings while driving traffic with selected
hardlines merchandise.
Total sales for the fourth quarter ended January 30,
1999 were $17.2 million or 3.7% below Forecast due primarily to
unseasonably warm weather during the holiday season that
adversely impacted sales of seasonal merchandise categories.
Comparable store sales increased 1.0% in the fourth quarter.
EBITDA (as defined in Exhibit 20B) fell short of Forecast by
$0.2 million due to the below-Forecast sales and associated
gross margin along with an unfavorable margin rate, mostly
offset by favorable SG&A expenses. The gross margin rate was
below Forecast in the fourth quarter due primarily to higher
markdowns to control inventory levels in light of the lower
sales, while SG&A expenses were below forecast mostly due to
favorable benefits expense (including a decision to freeze
non-union pension plan benefits and reinstate Company matching
contributions to its 401(k) plan), along with favorable home
office, advertising and store expenses, partially offset by
unfavorable logistics expenses.
Fiscal 1998 total sales were $35.8 million or 2.5% below
Forecast while year-to-date comparable store sales increased
3.5%. Annual EBITDA was $2.6 million below Forecast (but $0.4
million above the 1998 Plan and $6.8 million above last year)
due primarily to the below-Forecast sales and associated gross
margin, partially offset by favorable SG&A expenses. The fiscal
1998 SG&A expenses were below Forecast due to the same reasons
mentioned above for the fourth quarter.
Unrestricted cash was $1.3 million above
Forecast at January 30, 1999. Inventories were $4.5 million, or
2.0% above Forecast. Accounts payable was $5.4 million above
Forecast, while outstanding borrowings were $11.1 million above
Forecast due principally to the non-union pension freeze and the
associated curtailment (noncash) gain and the EBITDA shortfall
to Forecast. Under fresh-start reporting, the final balance
sheet as of January 30, 1999 becomes the opening balance sheet
of the reorganized Company. Since fresh-start reporting has
been reflected in the accompanying balance sheet as of January
30, 1999, the balance sheet as of that date is not comparable in
certain material respects to any such balance sheet as of any
prior date or for any prior period since the balance sheet as of
January 30, 1999 is that of a reorganized entity.
The Company is distributing the quarterly performance against
its Forecast and 1998 Plan (the "Quarterly Performance
Information") and the 1999 Plan to its banks and other credit
providers to facilitate their credit analyses. The Quarterly
Performance Information and the 1999 Plan should not be relied
--------------------
upon for any other purpose and should be read in conjunction
- --------------------------
with the Company's most recent Form S-1 and Form 10-K filings.
The Quarterly Performance Information and the 1999 Plan are
being reported publicly solely because they are being
distributed to a large number of the Company's vendors for
purposes of their credit analyses. Although the Company is
publicly disclosing the Quarterly Performance Information and
the 1999 Plan, the Company does not believe it is obligated to
subsequently update such information or to provide such
information indefinitely, and the Company may cease making such
disclosures at any time. The Quarterly Performance Information
and the 1999 Plan were not examined, reviewed or compiled by the
Company's independent public accountants.
The Quarterly Performance Information and
the 1999 Plan 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
Quarterly Performance Information and the 1999 Plan contain
forward looking statements which are based upon a variety of
assumptions (including assumptions concerning the continued
success of the Company's merchandising, marketing and
operational strategies and the related effects on sales and
gross margin) that may not be realized and are subject to
significant business, economic, political, climatic and
competitive uncertainties and potential contingencies, many of
which are beyond the Company's control. Consequently, the
Quarterly Performance Information and the 1999 Plan should not
be regarded as a representation or warranty by the Company, or
any other person, that the projections contained therein will be
realized. The Quarterly Performance Information and the 1999
Plan may be subject to future adjustments (e.g. actual results
may vary substantially from those presented in the 1999 Plan)
and such adjustments could materially affect the reported
information.
Item 7: FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND
EXHIBITS
Exhibit: 20A Fiscal 1999 Summary Financial Plan
20B Quarterly Performance Information
INDEX TO EXHIBITS
Exhibit No. Exhibit Page No.
20A Fiscal 1999 Summary Financial Plan 6
20B Quarterly Performance Information 9
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: March 31, 1999 By /s/ PETER THORNER
Peter Thorner
Chairman and Chief Executive
Officer
Date: March 31, 1999 By /s/ CORNELIUS F. MOSES III
Cornelius F. Moses III
Senior Vice President, Chief
Financial Officer
<TABLE>
<CAPTION>
BRADLEES, INC. EXHIBIT 20A
CONDENSED INCOME STATEMENT Page 1 of 3
MANAGEMENT FORMAT
($ 000's)
FISCAL 1999 SUMMARY FINANCIAL PLAN
QTR1 QTR2 QTR3 QTR4 ANNUAL
<S> <C> <C> <C> <C> :<C>
Owned Sales $285,100 $323,923 $327,259 $449,210 :$1,385,492
Food Service Sales 1,557 1,673 1,680 1,844 : 6,754
Leased Department Sales 8,995 13,048 11,078 12,150 : 45,271
--------- --------- --------- ---------:-----------
Total Sales 295,652 338,644 340,017 463,204 : 1,437,517
:
Comparable Store Sales % 2.4% 5.7% 6.0% 5.7%: 5.1%
:
Gross Margin $ 79,481 102,281 102,469 131,326 : 415,557
Gross Margin % (based on owned sales) 27.9% 31.6% 31.3% 29.2%: 30.0%
:
SG&A Expenses (96,246) (95,866) (93,161) (103,161): (388,434)
Other Income 2,636 3,462 3,158 3,679 : 12,935
--------- --------- --------- ---------:-----------
EBITDA (Loss) ($14,129) $9,877 $12,466 $31,844 : $40,058
--------- --------- --------- ---------:-----------
Depreciation & Amortization Expense (7,646) (7,421) (7,389) (6,868): (29,324)
Interest Expense * (7,356) (7,707) (8,053) (7,535): (30,651)
--------- --------- --------- --------- -----------
Net Income (Loss) ($29,131) ($5,251) ($2,976) $17,441 : ($19,917)
========= ========= ========= ========= ===========
CERTAIN FISCAL 1998 QUARTERLY AND ANNUAL RESULTS
QTR1 QTR2 QTR3 QTR4 ANNUAL
Total Sales $293,306 $322,791 $323,106 $441,913:$1,381,116
Comparable Store Sales % 9.9% 7.4% -2.0% 1.0%: 3.5%
:
Gross Margin $ 79,670 96,593 94,739 122,101: 393,103
Gross Margin % (based on owned sales) 28.2% 31.3% 30.5% 28.5%: 29.5%
--------- --------- --------- ---------:-----------
EBITDA (Loss) ($10,084) $7,300 $2,218 $33,008: $32,442
--------- --------- --------- --------- -----------
Note: EBITDA as presented is earnings (loss) before the cash impact from restructuring items (planned to total $2.7 million in
payments in 1999), emergence-related provision of $4.4 million in 1998, interest expense, income taxes, restructuring and non-
recurring items, gains (losses) on sales of properties, reorganization and extraordinary items, and depreciation and amortization.
*Fiscal 1999 includes approximately $9 million of annual noncash amortization of an unfavorable lease liability discount recorded
under fresh-start reporting.
</TABLE>
<TABLE>
<CAPTION>
BRADLEES, INC. EXHIBIT 20A
CONDENSED BALANCE SHEET Page 2 of 3
MANAGEMENT FORMAT
($ 000's)
FISCAL 1999 SUMMARY FINANCIAL PLAN
QTR1 QTR2 QTR3 QTR4
<S> <C> <C> <C> <C>
Assets
Current Assets:
Unrestricted cash & cash equivalents $10,281 $8,200 $11,200 $8,500
Inventories 260,631 247,073 320,486 222,133
Other current assets 18,233 15,993 22,795 19,228
--------- --------- --------- -----------
Total Current Assets 289,145 271,266 354,481 249,861
Net Fixed Assets 101,906 100,653 99,431 98,731
Long Term Assets 95,039 93,521 92,003 90,485
--------- --------- --------- -----------
Total Assets $486,090 $465,440 $545,915 $439,077
========= ========= ========= ===========
QTR1 QTR2 QTR3 QTR4
Liabilities
Current Liabilities:
Accounts payable $130,316 $123,537 $160,243 $111,066
Revolver borrowings 164,383 155,683 202,321 127,132
Other current liabilities 28,868 29,441 30,043 30,658
--------- --------- --------- -----------
Total Current Liabilities 323,567 308,661 392,607 268,856
Long-term capital lease obligations 24,907 24,505 24,077 23,625
Convertible notes payable 28,995 28,995 28,995 28,995
Unfavorable lease liability 44,921 45,260 45,600 45,939
Other long-term liabilities 37,831 37,401 36,994 36,579
Stockholders' Equity
Common stock 55,000 55,000 55,000 55,000
Accumulated deficit (29,131) (34,382) (37,358) (19,917)
--------- --------- --------- -----------
Total Stockholders' Equity 25,869 20,618 17,642 35,083
--------- --------- --------- -----------
Total Liabilities & Equity $486,090 $465,440 $545,915 $439,077
========= ========= ========= ===========
</TABLE>
<TABLE>
<CAPTION>
BRADLEES, INC. EXHIBIT 20A
CONDENSED CASH FLOW Page 3 of 3
MANAGEMENT FORMAT
($ 000's)
FISCAL 1999 SUMMARY FINANCIAL PLAN
QTR1 QTR2 QTR3 QTR4 ANNUAL
<S> <C> <C> <C> <C> <C>
Beginning unrestricted cash & cash equivalents $9,485 $10,281 $8,200 $11,200 $9,485
Cash generated from (used in) operations:
Net income (loss) (29,131) (5,251) (2,976) 17,441 (19,917)
Depreciation & amortization expense 7,646 7,421 7,389 6,868 29,324
Amortization of deferred financing costs 350 350 349 351 1,400
Inventory (increase) decrease (28,288) 13,558 (73,413) 98,353 10,210
Accounts payable increase (decrease) 11,014 (6,779) 36,706 (49,177) (8,236)
Other * (5,353) 2,722 (6,263) 4,104 (4,790)
--------- --------- ----------- ------------------
Net cash provided by (used in) operations* (43,762) 12,021 (38,208) 77,940 7,991
Investing activities:
Capital spending (5,000) (5,000) (5,000) (5,000) (20,000)
Financing activities:
Net borrowings (payments) under revolver 49,934 (8,700) 46,639 (75,190) 12,683
Payments of capital lease obligations (376) (402) (431) (450) (1,659)
--------- --------- ----------- ------------------
Total financing activities 49,558 (9,102) 46,208 (75,640) 11,024
--------- --------- ----------- ------------------
Increase (decrease) in unrestricted cash & cash equivalents 796 (2,081) 3,000 (2,700) (985)
--------- --------- ----------- ------------------
Ending unrestricted cash & cash equivalents $10,281 $8,200 $11,200 $8,500 $8,500
--------- --------- ----------- ------------------
*Includes certain cash outlays associated with prior years' reorganization provisions.
</TABLE>
<TABLE>
<CAPTION> BRADLEES, INC. Exhibit 20B
FOURTH QUARTER RESULTS VS. PLAN Page 1 of 2
(In Millions)
Fourth Quarter 1998 Fiscal 1998
Actual Forecast* Plan** :Last Yr.: Actual Forecast* Plan** :Last Year
<S> <C> <C> <C> : <C> : <C> <C> <C> :<C>
INCOME SUMMARY: : : :
Owned Sales $429.1 $445.0 $439.3 : $447.3 : $1,330.9 $1,364.1 $1,330.0 :$1,337.6
Food Service Sales 1.7 1.8 1.8 : 1.9 : 6.3 6.5 6.7 : 6.8
Leased Department Sales 11.1 12.3 12.2 : 12.4 : 43.9 46.3 47.2 : 47.8
------- ---------- -------: -------: --------- --------- ---------:---------
Total Sales 441.9 459.1 453.3 : 461.6 : 1,381.1 1,416.9 1,383.9 : 1,392.2
: : :
Gross Margin 122.1 130.7 131.0 : 126.7 : 393.1 405.3 400.0 : 396.4
Gross Margin % (based on owned sales) 28.5% 29.4% 29.8%: 28.3%: 29.5% 29.7% 30.1%: 29.6%
: : :
SG&A Expenses (92.1) (101.0) (99.3): (93.1): (372.5) (383.0) (380.7): (382.9)
: : :
Other Income 3.0 3.5 3.5 : 3.4 : 11.8 12.7 12.7 : 12.1
------- ---------- -------: -------: --------- --------- ---------:---------
EBITDA (Loss) 33.0 33.2 35.2 : 37.0 : 32.4 35.0 32.0 : 25.6
------- ---------- -------: -------: --------- --------- ---------:---------
Emergence-Related Provision (4.4) - - : - : (4.4) - - : -
Gain (Loss) on Disposition of Properties - - - : 5.4 : (0.2) (0.2) - : 5.4
Depreciation & Amortization Expense (7.9) (7.7) (8.1): (8.7): (32.2) (32.1) (34.4): (36.2)
Interest and Debt Expense (4.4) (4.4) (4.4): (4.9): (16.4) (16.6) (16.8): (16.6)
Reorganization Items (7.1) (2.0) (2.1): (2.9): (4.6) (4.3) (8.3): (0.8)
Fresh-Start Revaluation (108.4) - - : - : (108.4) - - : -
Extraordinary Gain on Debt Discharge 419.7 - - : - : 419.7 - - : -
------- ------------------:------------------------------------------------------
Net Income (Loss) $320.5 $19.1 $20.6 : $25.9 : $285.9 ($18.2) ($27.5): ($22.6)
======= ========== =======: ======= ========= ========= ========= =========
BALANCE SHEET SUMMARY: Balance at End of Period
Unrestricted Cash and Cash Equivalents $9.5 $8.2 $8.8 $10.9
Restricted Cash and Cash Equivalents - 25.2 25.3 16.8
Inventories 232.3 227.8 224.6 238.6
Other Current Assets 22.0 16.0 16.0 26.5
------- ------- --------- ---------
Total Current Assets 263.8 277.2 274.7 292.8
Net Fixed Assets 103.4 145.2 140.9 150.5
Long Term Assets 96.6 139.6 144.8 151.9
------- --------- --------- -------
Total Assets $463.8 $562.0 $560.4 $595.2
======= ========= ========= =========
Accounts Payable $119.3 $113.9 $101.1 $124.4
Revolver/DIP Borrowings 114.4 103.3 107.0 84.2
Other Current Liabilities 37.9 31.1 43.1 32.0
------- --------- --------- ---------
Total Current Liabilities 271.6 248.3 251.2 240.6
Long-Term Liabilities 137.2 65.5 64.2 78.4
Liabilities Subject to Settlement - 552.4 558.0 562.1
Paid-in-Capital 55.0 137.1 137.3 137.2
Accumulated Deficit - (441.3) (450.3) (423.1)
------- --------- --------- ---------
Total Stockholders' Equity (Deficiency) 55.0 (304.2) (313.0) (285.9)
------- --------- --------- ---------
Total Liabilities and Stockholders' Equity (Deficiency) $463.8 $562.0 $560.4 $595.2
======= ========= ========= =========
* As filed on Form 8-K dated September 22, 1998.
** As filed on 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.
Note: EBITDA as presented is earnings (loss) before the cash impact from restructuring, emergence-related
provision of $4.4 million in fiscal 1998, interest expense, income taxes, restructuring and non-recurring
items, gains (losses) on sale of properties, reorganization and extraordinary items, and depreciation and amortization.
</TABLE>
<TABLE>
<CAPTION>
Exhibit 20B
Page 2 of 2
BRADLEES, INC.
FOURTH QUARTER RESULTS VS. PLAN
(Unaudited)
(In Millions)
Fourth Quarter 1998 Fiscal 1998
Actual Forecast* Plan** Actual Forecast* Plan**
<S> <C> <C> <C> <C> <C> <C>
CASH FLOW SUMMARY:
Beginning Unrestricted Cash & Cash Equiv. $11.0 $11.2 $11.3 $10.9 $10.9 $9.5
Cash Used in Operations:
Net Income (Loss) 320.5 19.1 20.6 285.9 (18.2) (27.5)
Depreciation & Amortization Expense 7.9 7.7 8.1 32.2 32.1 34.4
Amortization of Deferred Financing Costs 0.9 0.4 0.3 2.1 1.5 1.4
Fresh-Start Revaluation Charge 108.4 - - 108.4 - -
Extroardinary Gain on Debt Discharge (419.7) - - (419.7) - -
Inventory Decrease (Increase) 86.6 82.6 102.0 6.3 10.9 11.7
Accounts Payable Increase (Decrease) (59.7) (41.3) (62.2) (4.6) (10.4) (4.1)
Other, Including Reorganization Items 7.6 5.8 13.4 (17.1) (12.9) (7.3)
--------- ------- -------- ------- ------- ------
Net Cash Provided by (Used in) Operations 52.5 74.3 82.2 (6.5) 3.0 8.6
Investing Activities:
Capital Spending (6.7) (7.2) (5.0) (17.1) (20.0) (20.0)
Decr.(Incr.) in Rest. Cash and Cash Equiv. 25.1 (0.2) (0.2) 16.8 (8.5) (8.5)
Financing Activities:
Payments of Cap. Leases & Def. Fin. Costs (0.4) (0.3) (0.5) (1.3) (1.1) (1.4)
Proceeds from Disposition of Properties 11.0 - - 23.0 12.0 7.8
Payment on New Notes (11.0) - - (11.0) - -
Payments of Liabs. Subject to Settlement (0.7) (1.0) (1.0) (7.2) (7.2) (4.1)
Net Borrowings (Payments) under the DIP Facil. (157.4) (68.6) (78.0) (84.2) 19.1 16.9
Borrowings under Post-Emergence Revolver 114.4 - - 114.4 - -
Consummation Cash Distributions (28.3) - - (28.3) - -
--------- ------- ---------- ------- ------- ---------
Total Financing Activities (72.4) (69.9) (79.5) 5.4 22.8 19.2
--------- ------- ---------- ------- ------- ---------
Incr. (Decr.) in Unrest. Cash & Equiv. (1.5) (3.0) (2.5) (1.4) (2.7) (0.7)
--------- ------- ---------- ------- ------- ---------
Ending Unrestricted Cash and Cash Equiv. $9.5 $8.2 $8.8 $9.5 $8.2 $8.8
========= ======= ========== ======= ======= =========
* As filed on Form 8-K dated September 22, 1998.
** As filed on 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.
</TABLE>
