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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934.
For the quarterly period ended June 30, 1998
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934.
Commission File No. 1-14146
CORT BUSINESS SERVICES CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 54-1662135
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
4401 Fair Lakes Court, Fairfax, VA 22033
(Address of principal executive offices) (Zip Code)
(703) 968-8500
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [X] No [ ]
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date.
<TABLE>
<CAPTION>
Outstanding as of
Class August 10, 1998
----- ---------------
<S> <C>
Common Stock, $.01 par value 13,035,363
Class B Common Stock, $.01 par value - 0 -
</TABLE>
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<PAGE>
CORT BUSINESS SERVICES CORPORATION
INDEX TO FORM 10-Q
<TABLE>
<CAPTION>
Page No.
--------
<S> <C>
Part I. FINANCIAL INFORMATION
Item 1. FINANCIAL STATEMENTS
Condensed Consolidated Balance Sheets..................... 1
Condensed Consolidated Statements of Operations........... 2
Condensed Consolidated Statements of Cash Flows........... 3
Notes to Condensed Consolidated Financial Statements...... 4
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS.................... 6
Part II. OTHER INFORMATION
Item 6. EXHIBITS AND REPORTS ON FORM 8-K......................... 10
SIGNATURE.................................................................. 11
</TABLE>
<PAGE>
CORT BUSINESS SERVICES CORPORATION AND SUBSIDIARY
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
<TABLE>
<CAPTION>
December 31, June 30,
1997 1998
---- ----
(unaudited)
ASSETS
<S> <C> <C>
Cash and cash equivalents .................................. $ -- $ 879
Accounts receivable, net ................................... 13,521 13,585
Prepaid expenses ........................................... 4,127 4,870
Rental furniture, net ...................................... 164,323 178,275
Property, plant and equipment, net ......................... 38,777 41,748
Other receivables and assets, net .......................... 3,183 5,796
Goodwill, net .............................................. 53,910 61,564
-------- --------
Total assets .......................................... $277,841 $306,717
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Accounts payable ........................................... $ 5,551 $ 6,650
Accrued expenses ........................................... 27,936 27,671
Deferred revenue and security deposits ..................... 17,217 20,306
Revolving credit facility .................................. 13,200 23,000
Senior notes, 12% .......................................... 49,932 49,932
Deferred income taxes ...................................... 14,673 14,673
-------- --------
128,509 142,232
Stockholders' equity ....................................... 149,332 164,485
-------- --------
Total liabilities and stockholders' equity ............ $277,841 $306,717
======== ========
</TABLE>
See accompanying notes to unaudited condensed consolidated financial statements.
<PAGE>
CORT BUSINESS SERVICES CORPORATION AND SUBSIDIARY
UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(in thousands, except per share amounts)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
------------------------ ------------------------
1997 1998 1997 1998
---- ---- ---- ----
Revenue:
<S> <C> <C> <C> <C>
Furniture rental .............................................. $ 59,679 $ 65,065 $115,232 $127,879
Furniture sales ............................................... 14,802 13,065 26,550 25,694
-------- -------- -------- --------
Total revenue ............................................. 74,481 78,130 141,782 153,573
-------- -------- -------- --------
Operating costs and expenses:
Cost of furniture rental ...................................... 11,383 11,781 22,015 22,868
Cost of furniture sales ....................................... 9,189 7,921 16,097 15,536
Selling, general and administrative expenses .................. 42,166 45,074 81,516 89,240
-------- -------- -------- --------
Total costs and expenses .................................. 62,738 64,776 119,628 127,644
-------- -------- -------- --------
Operating earnings ........................................ 11,743 13,354 22,154 25,929
Interest expense ................................................... 2,253 2,071 4,238 4,038
-------- -------- -------- --------
Income before income taxes ............................... 9,490 11,283 17,916 21,891
Income taxes ....................................................... 3,883 4,763 7,379 9,180
-------- -------- -------- --------
Net income ............................................... $ 5,607 $ 6,520 $ 10,537 $ 12,711
======== ======== ======== ========
Earnings per common share .......................................... $ .44 $ .50 $ .83 $ .98
Weighted average number of common
shares used in computation ................................... 12,796 13,022 12,760 12,973
Earnings per common share - assuming dilution ...................... $ .42 $ .48 $ .79 $ .94
Weighted average number of common
shares used in computation - assuming dilution ............... 13,337 13,507 13,317 13,490
</TABLE>
See accompanying notes to unaudited condensed consolidated financial statements.
2
<PAGE>
CORT BUSINESS SERVICES CORPORATION AND SUBSIDIARY
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
<TABLE>
<CAPTION>
Six Months Ended
June 30,
--------------------
1997 1998
---- ----
Cash flows from operating activities:
<S> <C> <C>
Net income ............................................. $ 10,537 $ 12,711
Proceeds of disposals of rental furniture in
excess of gross profit ............................... 14,341 14,791
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization:
Rental furniture depreciation ...................... 16,309 17,415
Other depreciation and amortization ................ 2,342 2,952
Goodwill amortization .............................. 735 900
Amortization of debt issuance costs ................ 360 376
Rental furniture inventory shrinkage ................ 1,520 1,540
Changes in operating accounts, net .................. 4,240 3,607
-------- --------
Net cash provided by operating activities .......... 50,384 54,292
-------- --------
Cash flows from investing activities:
Purchases of rental furniture .......................... (45,373) (46,136)
Purchase of portfolio acquisitions ..................... (13,147) (9,373)
Purchase of investment ................................. -- (3,000)
Purchases of property, plant and equipment ............. (3,983) (5,570)
Sales of property, plant and equipment ................. 65 107
-------- --------
Net cash used by investing activities .............. (62,438) (63,972)
-------- --------
Cash flows from financing activities:
Borrowings on the revolving credit facility ............ 46,112 33,200
Repayments on the revolving credit facility ............ (34,212) (23,400)
Issuance of common stock ............................... 316 759
Repayments of long term debt ........................... (68) --
-------- --------
Net cash provided by financing activities .......... 12,148 10,559
-------- --------
Net increase (decrease) in cash and cash equivalents 94 879
Cash and cash equivalents at beginning of period ............ 123 --
-------- --------
Cash and cash equivalents at end of period .................. $ 217 $ 879
======== ========
Supplemental disclosure of cash flow information:
Interest paid .......................................... $ 3,743 $ 3,509
Income taxes paid ...................................... 5,332 5,373
Tax benefit from exercise of stock options ............. 529 1,683
</TABLE>
See accompanying notes to unaudited condensed consolidated financial statements.
3
<PAGE>
CORT BUSINESS SERVICES CORPORATION AND SUBSIDIARY
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1998
(1) Basis of Presentation
In the opinion of management, the accompanying unaudited condensed
consolidated financial statements reflect all adjustments, consisting of
only normal recurring accruals, necessary for a fair presentation of the
consolidated financial position of CORT Business Services Corporation
("CORT" or the "Company") and Subsidiary as of June 30, 1998, and the
results of their operations for the three months ended June 30, 1998 and
1997 and for the six months ended June 30, 1998 and 1997 and the cash flows
for the six months ended June 30, 1998 and 1997. The results of operations
for the six months ended June 30, 1998 are not necessarily indicative of the
results that may be expected for the full year. These condensed consolidated
financial statements are unaudited, and do not include all related footnote
disclosures.
The interim unaudited condensed consolidated financial statements should be
read in conjunction with the audited consolidated financial statements
included in the Company's 1997 Annual Report on Form 10-K.
(2) Income Taxes
The Internal Revenue Service ("IRS") has proposed the disallowance of
certain deductions taken by Fairwood Corporation for a consolidated tax
group of which CORT Furniture Rental Corporation ("CFR") was previously a
member (the "Former Group") through the year ended December 31, 1988. The
IRS challenge includes the assertion that certain interest deductions taken
by the Former Group should be recharacterized as non-deductible dividend
distributions and that deductions for certain expenses related to the
acquisition of Mohasco Corporation (now Consolidated Furniture Corporation
("Consolidated")), CFR's former shareholder, be disallowed. Fairwood
Corporation has indicated to the Company that it has reached an agreement
with the IRS regarding a settlement of the proposed adjustments. The total
tax liability of the Former Group under the terms of the settlement is
approximately $6 million, including interest through December 31, 1997. The
terms of the settlement are subject to approval by the bankruptcy court
handling Fairwood Corporation's bankruptcy filing.
Under IRS regulations, the Company and each other member of the Former Group
is severally liable for the full amount of any Federal income tax liability
of the Former Group while CFR was a member of the Former Group, which could
be as much as approximately $4.5 million for such periods (including
interest through December 31, 1997) under the terms of the settlement. Under
the agreement of sale for CFR, Consolidated agreed to indemnify the Company
in full for any consolidated tax liability of the Former Group for the years
during which CFR was a member of the Former Group. In addition, the Company
may have rights of contribution against other members of the Former Group if
the Company were required to pay more than its equitable share of any
consolidated tax liability. The Company is not in a position to determine
the probable outcome of the bankruptcy court decisions, nor the impact on
the Company's consolidated financial statements, if any.
4
<PAGE>
(3) Earnings Per Share
The following table sets forth the computation of basic and diluted earnings
per share:
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
------------------------ ------------------------
1997 1998 1997 1998
---- ---- ---- ----
<S> <C> <C> <C> <C>
Weighted average shares outstanding
during the period ......................... 12,796,180 13,021,664 12,760,082 12,973,101
Effect of dilutive securities:
Stock options ............................. 463,581 446,881 462,756 467,856
Warrants .................................. 77,153 38,841 94,542 48,715
----------- ----------- ----------- -----------
Weighted average common shares -
assuming dilution ......................... 13,336,914 13,507,386 13,317,380 13,489,672
----------- ----------- ----------- -----------
Net income applicable to common shares ...... $ 5,607,000 $ 6,520,000 $10,537,000 $12,711,000
=========== =========== =========== ===========
Earnings per common share ................... $ .44 $ .50 $ .83 $ .98
=========== =========== =========== ===========
Earnings per common share - assuming dilution $ .42 $ .48 $ .79 $ .94
=========== =========== =========== ===========
</TABLE>
(4) New Accounting Pronouncements
In June 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 131 (FAS No. 131), "Disclosure about
Segment of an Enterprise and Related Information." FAS No. 131 requires CORT
to present certain information about operating segments and related
information, including geographic and major customer data, in its annual
financial statements and in condensed financial statements for interim
periods. The Company is required to adopt the provisions of this statement
during fiscal year 1998 and plans to implement the provisions of this
statement at December 31, 1998. Management is currently determining the
necessary additional disclosures, if any.
5
<PAGE>
CORT BUSINESS SERVICES CORPORATION AND SUBSIDIARY
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(dollar figures in thousands)
Results of Operations
Three months ended June 30, 1998 as compared to three months ended June 30, 1997
Revenue
Total revenue increased 4.9% to $78,130 for the three months ended June 30, 1998
from $74,481 for the three months ended June 30, 1997. Furniture rental revenue
for the three months ended June 30, 1998 was $65,065, a 9.0% increase from
$59,679 in 1997. Rental revenue growth before the impact of acquisitions, merged
markets and trade show operations was approximately 5.5% which reflects growth
in the number of leases as well as revenue per lease. Furniture sales decreased
11.7% to $13,065 for the three months ended June 30, 1998. This decrease is a
result of an unusually large corporate sale in last year's quarter and this
year's quarter reflects the impact of closing the model home business in
Atlanta. Adjusting for these events, furniture sales revenue would have
increased 6.7%.
Operating Costs and Expenses
Cost of furniture rental has decreased from 19.1% of furniture rental revenue in
1997 to 18.1% of furniture rental revenue in 1998. The improvement in rental
margins is primarily attributable to the expansion of CORT's housewares
business. Cost of furniture sales decreased from 62.1% of furniture sales
revenue in 1997 to 60.6% in 1998. Without the unusually large corporate sale,
cost of furniture sales for 1997 would be 60.0%.
Selling, general and administrative expenses totaled $45,074 or 57.7% of total
revenue for the quarter ended June 30, 1998 as compared to $42,166 or 56.6% of
total revenue for the quarter ended June 30, 1997. Increased costs attributable
to the Company's investments in personnel, facilities and new programs were
partially offset by efficiencies gained in the California markets. Operating
expenses as a percent of total revenue, after adjustment for last years
corporate sale, remained stable.
Operating Earnings
As a result of the changes in revenue, operating costs and expenses discussed
above, operating earnings were $13,354 or 17.1% of total revenue in the second
quarter of 1998 compared to $11,743 or 15.8% of total revenue in the second
quarter of 1997.
Six months ended June 30, 1998 as compared to six months ended June 30, 1997
Revenue
Total revenue increased 8.3% to $153,573 for the six months ended June 30, 1998
from $141,782 for the six months ended June 30, 1997. Furniture rental revenue
for the six months ended June 30, 1998 was $127,879, a 11.0% increase from
$115,232 in 1997. Rental revenue growth before the impact of acquisitions,
merged markets and trade show operations was approximately 6% which reflects
growth in the number of leases as well as revenue per lease. Furniture sales
decreased 3.2% to $25,694 for the six months ended June 30, 1998. This decrease
is a result of an unusually large corporate sale in 1997 and the impact of
closing the model home business in Atlanta in 1998. Adjusting for these events,
furniture sales revenue would have increased 9.2%.
6
<PAGE>
CORT BUSINESS SERVICES CORPORATION AND SUBSIDIARY
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
(dollar figures in thousands)
Operating Costs and Expenses
Cost of furniture rental has decreased from 19.1% of furniture rental revenue in
1997 to 17.9% of furniture rental revenue in 1998. The improvement in rental
margins is attributable to the expansion of CORT's housewares and trade show
furnishings operations. Cost of furniture sales decreased from 60.6% of
furniture sales revenue in 1997 to 60.5% in 1998. Without the unusually large
corporate sale, cost of furniture sales would be 59.4% for 1997.
Selling, general and administrative expenses totaled $89,240 or 58.1% of total
revenue for the six months ended June 30, 1998 as compared to $81,516 or 57.5%
of total revenue for the same six months of 1997. While the Company made
investments in personnel, facilities and new programs, these increased costs
were generally offset by efficiencies gained in the California markets. Selling,
general and administrative expenses, adjusted for last year's corporate sale,
remained relatively flat as a percentage of revenue.
Operating Earnings
As a result of the changes in revenue, operating costs and expenses discussed
above, operating earnings were $25,929 or 16.9% of total revenue for the six
months ended June 30, 1998 compared to $22,154 or 15.6% of total revenue for the
six months ended June 30, 1997.
Furniture Purchases
Furniture purchases, which totaled $46,136 in the six months ended June 30,
1998, increased slightly from the $45,373 purchased in the six months ended June
30, 1997. Purchases for start-up districts and incubator businesses in 1997
included building inventory in line with expansion requirements while 1998
reflected purchases required by normal business operations. The increase is the
net effect of increased purchases for acquired operations offset in part by
reduced requirements in start-up and merged markets.
Liquidity and Capital Resources
CORT Business Services Corporation is a holding company with no independent
operations, no material obligations and no material assets other than its
ownership of CFR. The Company is dependent on the receipt of dividends or
distributions from CFR to fund any obligations. The revolving credit facility
and the indenture governing the Senior Notes restrict the ability of CFR to make
advances and pay dividends to the Company.
The Company's primary capital requirements are for purchases of rental
furniture. The Company purchases furniture throughout each year to replace
furniture which has been sold and to maintain adequate levels of rental
furniture to meet existing and new customer needs. As the Company's growth
strategies continue to be implemented, furniture purchases are expected to
increase.
The Company's other capital requirements consist primarily of purchases of
property, plant and equipment, including leasehold improvements, warehouse and
office equipment, standard programming enhancements and computer hardware. Net
purchases of property, plant and equipment were $3,918 and $5,463 in the six
months ended June 30, 1997 and 1998, respectively.
During the six months ended June 30, 1997 and 1998, net cash provided by
operations was $50,384 and $54,292, respectively. During the six months ended
June 30, 1997 and 1998, net cash used by investing activities was $62,438 and
$63,972, respectively, consisting primarily of purchases of rental furniture and
portfolio acquisitions. During the six months ended June 30, 1997 and 1998, net
cash provided by financing activities was $12,148 and $10,559 respectively.
The Company is required to make semi-annual interest payments, in arrears on
March 1 and September 1, of approximately $3,000 ($6,000 annually) on the Senior
7
<PAGE>
CORT BUSINESS SERVICES CORPORATION AND SUBSIDIARY
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
(dollar figures in thousands)
Notes. The Company will not be required to make principal repayments on the
Senior Notes until maturity on September 1, 2000. On August 12, 1998, the
Company announced that it will redeem the remaining $49,932 of its 12% Senior
Notes on September 10, 1998 at a price of 107% of the principal amount plus
accrued and unpaid interest to the date of redemption. The Company intends to
use borrowings under an expanded credit line with its existing bank group to
redeem the notes. As a result of the early retirement of the Senior Notes, the
Company will recognize an extraordinary loss in the third quarter of 1998.
CFR has available a revolving line of credit of $75,000 to meet acquisition and
expansion needs as well as seasonal working capital and general corporate
requirements. CFR had borrowings of $23,000 under the line of credit at June 30,
1998. On August 10, 1998, the credit line was expanded to $125,000; the terms of
the credit facility were unchanged.
The Internal Revenue Service ("IRS") has proposed the disallowance of certain
deductions taken by Fairwood Corporation for a consolidated tax group of which
CORT Furniture Rental Corporation ("CFR") was previously a member (the "Former
Group") through the year ended December 31, 1988. The IRS challenge includes the
assertion that certain interest deductions taken by the Former Group should be
recharacterized as non-deductible dividend distributions and that deductions for
certain expenses related to the acquisition of Mohasco Corporation (now
Consolidated Furniture Corporation ("Consolidated")), CFR's former shareholder,
be disallowed. Fairwood Corporation has indicated to the Company that it has
reached an agreement with the IRS regarding a settlement of the proposed
adjustments. The total tax liability of the Former Group under the terms of the
settlement is approximately $6 million, including interest through December 31,
1997. The terms of the settlement are subject to approval by the bankruptcy
court handling Fairwood Corporation's bankruptcy filing.
Under IRS regulations, the Company and each other member of the Former Group is
severally liable for the full amount of any Federal income tax liability of the
Former Group while CFR was a member of the Former Group, which could be as much
as approximately $4.5 million for such periods (including interest through
December 31, 1997) under the terms of the settlement. Under the agreement of
sale for CFR, Consolidated agreed to indemnify the Company in full for any
consolidated tax liability of the Former Group for the years during which CFR
was a member of the Former Group. In addition, the Company may have rights of
contribution against other members of the Former Group if the Company were
required to pay more than its equitable share of any consolidated tax liability.
The Company is not in a position to determine the probable outcome of the
bankruptcy court decisions, nor the impact on the Company's consolidated
financial statements, if any.
Forward-Looking Statements
In addition to historical information, this Quarterly Report on Form 10-Q
includes certain forward-looking statements as such term is defined in Section
27A of the Securities Act and Section 21E of the Exchange Act. These
forward-looking statements involve certain risks and uncertainties, including
but not limited to acquisitions, additional financing requirements, development
of new products and services, purchases of rental property, the effect of
competitive products and pricing and the effect of general economic conditions,
that could cause actual results to differ materially from those in such
forward-looking statements.
8
<PAGE>
CORT BUSINESS SERVICES CORPORATION AND SUBSIDIARY
PART II. OTHER INFORMATION
Item 4. SUBMISSIONS OF MATTERS TO A VOTE OF SECURITY-HOLDERS
The Annual Meeting of Stockholders of the Company was held on May 14,
1998. Set forth below is a description of the matters voted upon and the
number of votes cast for, against or withheld, as well as the number of
abstentions and broker nonvotes, as applicable to each such matter.
1. The following seven directors were elected to the Board of
Directors of the Company. There were no other nominees for director.
A. Keith E. Alessi E. Charles Egan
Shares voted for: 12,029,735 Shares voted for: 12,029,735
Shares withheld: 21,500 Shares withheld: 21,500
Abstentions: N/A Abstentions: N/A
Broker nonvotes: N/A Broker nonvotes: N/A
B. Paul N. Arnold F. Gregory Maffei
Shares voted for: 12,029,735 Shares voted for: 12,029,735
Shares withheld: 21,500 Shares withheld: 21,500
Abstentions: N/A Abstentions: N/A
Broker nonvotes: N/A Broker nonvotes: N/A
C. Bruce C. Bruckmann G. James A. Urry
Shares voted for: 12,029,735 Shares voted for: 12,029,735
Shares withheld: 21,500 Shares withheld: 21,500
Abstentions: N/A Abstentions: N/A
Broker nonvotes: N/A Broker nonvotes: N/A
D. Michael A. Delaney
Shares voted for: 12,029,735
Shares withheld: 21,500
Abstentions: N/A
Broker nonvotes: N/A
2. The accounting firm of KPMG Peat Marwick LLP was elected independent
accountants for the year ending December 31, 1998.
Shares voted for: 12,047,235
Shares voted against: 2,670
Shares withheld: N/A
Abstentions: 1,330
Broker nonvotes: N/A
9
<PAGE>
CORT BUSINESS SERVICES CORPORATION AND SUBSIDIARY
PART II. OTHER INFORMATION (CONTINUED)
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits (see Index on page E-1)
(b) Reports on Form 8-K:
None.
10
<PAGE>
CORT BUSINESS SERVICES CORPORATION AND SUBSIDIARY
SIGNATURE
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.
CORT BUSINESS SERVICES CORPORATION
(Registrant)
Date: August 15, 1998 By: /s/ Frances Ann Ziemniak
--------------------- ----------------------------
Frances Ann Ziemniak
Vice President, Finance, CFO
and Secretary
(Principal financial and
principal accounting officer)
11
<PAGE>
CORT BUSINESS SERVICES CORPORATION AND SUBSIDIARY
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit
Number Description Page
------ ----------- ----
<S> <C> <C>
2.1 Stock Purchase Agreement, dated June 22, 1993, by and among
the Company, Interfinancial, Inc., General Furniture Leasing
Company and Fortis, Inc.; incorporated by reference to Exhibit
2.1 to CFR's Registration Statement on Form S-1, No. 33-65094,
filed on June 25, 1993
2.2 First Amendment to Stock Purchase Agreement, dated as of
August 31, 1993, by and among the Company, Fortis, Inc.,
Interfinancial, Inc. and General Furniture Leasing Company;
incorporated by reference to Exhibit 2.2 to CFR's Quarterly
Report on Form 10-Q for the fiscal quarter ended September 30,
1993
2.3 Assignment and Assumption Agreement, dated as of August 31,
1993, between CFR and the Company; incorporated by reference
to Exhibit 2.3 to CFR's Quarterly Report on Form 10-Q for the
fiscal quarter ended September 30, 1993
2.4 Acquisition Agreement, dated March 15, 1996, by and among the
Company, CE Merger Sub Inc. and Evans Rents; incorporated by
reference to Exhibit 2.4 to the Company's Annual Report on
Form 10-K for the year ended December 31, 1995
3.1 Restated Certificate of Incorporation of the Company;
incorporated by reference to Exhibit 3.1 to Amendment No. 3 to
the Company's Registration Statement on Form S-1, No. 33-97568
filed on November 13, 1995
3.2 Amendment to Restated Certificate of Incorporation;
incorporated by reference to Appendix A to the Company's
Definitive Proxy Statement on Schedule 14A, filed as of March
31, 1997
3.3 By-laws of the Company; incorporated by reference to Exhibit
3.2 to Amendment No. 3 to the Company's Registration Statement
on Form S-1, No. 33-97568 filed on November 13, 1995
4.1 Form of Indenture between CFR and United States Trust Company
of New York, as Trustee, with respect to CFR's 12% Senior
Notes due 2000; incorporated by reference to Exhibit 4.1 to
Amendment No. 3 to the Company's Registration Statement on
Form S-1, No. 33-65094, filed on August 20, 1993
4.2 First Supplemental Indenture between CFR and United States
Trust Company of New York, as Trustee, dated August 25, 1995;
incorporated by reference to Exhibit 4.2 to the Company's
Registration Statement on Form S-1, No. 33-97568 filed on
September 29, 1995
4.3 Second Supplemental Indenture between CFR and United States
Trust Company of New York, as Trustee, dated September 29,
1995; incorporated by reference to Exhibit 4.9 to Amendment
No. 1 to the Company's Registration Statement on Form S-1, No.
33-97568 filed on October 23, 1995
4.4 Warrant Agreement, dated September 1, 1993, between the
Company and United States Trust Company of New York, as
Warrant Agent; incorporated by reference to Exhibit 4.7 to the
Company's Registration Statement on Form S-1, No.
33-97568 filed on September 29, 1995
</TABLE>
E-1
<PAGE>
<TABLE>
<CAPTION>
Exhibit
Number Description Page
------ ----------- ----
<S> <C> <C>
4.5 Amendment No. 1 to Warrant Agreement, dated February 1, 1994,
between the Company and United States Trust Company of New
York, as Warrant Agent; incorporated by reference to Exhibit
4.8 to the Company's Registration Statement on Form S-1, No.
33-97568 filed on September 29, 1995
10.1 Credit Agreement dated as of February 13, 1998 by and among
CFR, the Company, the lenders identified therein, and
NationsBank, N.A., as agent; incorporated by reference to
Exhibit 10.1 to the Company's Annual Report on Form 10-K for
the fiscal year ended December 31, 1997
10.2 Stock Option, Securities Purchase and Stockholders Agreement,
dated as of January 18, 1994, by and among the Company, CFR,
Citicorp Venture Capital Ltd. and certain investors named
therein; incorporated by reference to Exhibit 4.6 to the
Company's Registration Statement on Form S-8, No. 33-72724,
filed on December 9, 1993
10.3 Amendment 1 to New Cort Holdings Corporation and Subsidiaries
Employee Stock Option and Stock Purchase Plan as adopted by
the Board of Directors of the Company on December 21, 1993;
incorporated by reference to Exhibit 10.11 to CFR's Annual
Report on Form 10-K for the fiscal year ended December 31,
1993
10.4 New Cort Holdings Corporation and Subsidiaries Employee Stock
Option and Stock Purchase Plan (1995 Plan Distribution) as
adopted by the Board of Directors of the Company on December
16, 1994; incorporated by reference to Exhibit 10.13 to CFR's
Quarterly Report on Form 10-Q for the fiscal quarter ended
June 30, 1995
10.5 Form of First Amendment to Stockholders Agreement, dated as of
November 13, 1995, by and among the Company, Citicorp Venture
Capital Ltd., and certain investors named therein;
incorporated by reference to Exhibit 10.5 to Amendment No. 3
to the Company's Registration Statement on Form S-1, No.
33-97568 filed on November 13, 1995
10.6 Registration Rights Agreement for Common Stock, dated as of
January 18, 1994, by and among the Company, Citicorp Venture
Capital Ltd. and certain investors named therein; incorporated
by reference to Exhibit 10.4 to the Company's Quarterly Report
on Form 10-Q for the fiscal quarter ended March 31, 1994
10.7 CFR's Supplemental Executive Retirement Plan, dated October
28, 1992, as revised effective January 1, 1993, restated
through the Second Amendment; incorporated by reference to
Exhibit 10.8 to the Company's Annual Report on Form 10-K for
the year ended December 31, 1996
10.8 Agreement for Irrevocable Trust Under CORT Furniture Rental
Supplemental Executive Retirement Plan, dated June 1, 1996,
between CFR and Mentor Trust Company; incorporated by
reference to Exhibit 10.9 to the Company's Annual Report on
Form 10-K for the year ended December 31, 1996
10.9 Letter Agreement, dated July 24, 1992, between CFR and Paul N.
Arnold; incorporated by reference to Exhibit 10.16 to CFR's
Registration Statement on Form S-1, No. 33-65094, filed on
June 25, 1993
10.10 Letter Agreement, dated August 18, 1993, between CFR and Paul
N. Arnold; incorporated by reference to Exhibit 10.26 to
Amendment No. 5 to the Company's Registration Statement on
Form S-1, No. 33-65094, filed on August 25, 1993
</TABLE>
E-2
<PAGE>
<TABLE>
<CAPTION>
Exhibit
Number Description Page
------ ----------- ----
<S> <C> <C>
10.11 Employment Agreement, dated September 1, 1994, between CFR and
Charles M. Egan; incorporated by reference to Exhibit 10.10 to
CFR's Annual Report on Form 10-K for the year ended December
31, 1994
10.12 Amended and Restated CORT Business Services Corporation 1995
Directors Stock Option Plan adopted by the Board of Directors
October 18, 1995 and amended and restated on May 14, 1997;
incorporated by reference to Exhibit 10.13 to the Company's
Quarterly Report on Form 10-Q for the fiscal quarter ended
June 30, 1997
10.13 Equity Share Agreement, between CFR and Lloyd and Eileen S.
Lenson, dated April 20, 1994; incorporated by reference to
Exhibit 10.17 to the Company's Registration Statement on Form
S-1, No. 33-97568 filed on September 29, 1995
10.14 Form of Senior Notes Purchase Agreement between CFR and
certain holders of CFR's 12% Senior Notes Due 2000, dated
September 28, 1995; incorporated by reference to Exhibit 10.18
to Amendment No. 2 to the Company's Registration Statement on
Form S-1, No. 33-97568 filed on November 1, 1995
10.15 Private Exchange Commitment Letter by and among the Company,
Citicorp Venture Capital Ltd. and certain investors, dated
September 28, 1995; incorporated by reference to Exhibit 10.19
to Amendment No. 1 to the Company's Registration Statement on
Form S-1, No. 33-97568 filed on October 23, 1995
10.16 Amended and Restated CORT Business Services Corporation 1995
Stock Based Incentive Compensation Plan as adopted by the
Board of Directors on July 25, 1995 and amended and restated
on May 14, 1997; incorporated by reference to Exhibit 10.17 to
the Company's Quarterly Report on Form 10-Q for the fiscal
quarter ended June 30, 1997.
10.17 CORT Business Services Corporation 1997 Directors Stock Option
Plan, as adopted by the stockholders of the Company at the
Annual Meeting of Stockholders on May 14, 1997; incorporated
by reference to Appendix C to the Company's Definitive Proxy
Statement on Schedule 14A, filed as of March 31, 1997
11.1 Statement re computation of per share earnings; incorporated
by reference to page 5 of the Company's Form 10-Q for the
fiscal quarter ended June 30, 1998
27 Financial Data Schedules
</TABLE>
E-3
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<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> JUN-30-1998
<CASH> 879
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<RECEIVABLES> 16,560
<ALLOWANCES> 2,975
<INVENTORY> 178,275
<CURRENT-ASSETS> 0
<PP&E> 69,376
<DEPRECIATION> 27,628
<TOTAL-ASSETS> 306,717
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0
0
<COMMON> 130
<OTHER-SE> 164,355
<TOTAL-LIABILITY-AND-EQUITY> 306,717
<SALES> 25,694
<TOTAL-REVENUES> 153,573
<CGS> 15,536
<TOTAL-COSTS> 38,404
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<INCOME-PRETAX> 21,891
<INCOME-TAX> 9,180
<INCOME-CONTINUING> 12,711
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<CHANGES> 0
<NET-INCOME> 12,711
<EPS-PRIMARY> .98
<EPS-DILUTED> .94
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<TABLE> <S> <C>
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<S> <C>
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<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> JUN-30-1997
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<RECEIVABLES> 15,749
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0
0
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<TOTAL-COSTS> 38,112
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<LOSS-PROVISION> 739
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<INCOME-TAX> 7,379
<INCOME-CONTINUING> 10,537
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