<PAGE>
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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, 1999
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.
OUTSTANDING AS OF
CLASS JULY 30, 1999
----- -------------
COMMON STOCK, $.01 PAR VALUE 13,096,560
CLASS B COMMON STOCK, $.01 PAR VALUE - 0 -
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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
Unaudited Condensed Consolidated Balance Sheets............................................1
Unaudited Condensed Consolidated Statements of Operations..................................2
Unaudited Condensed Consolidated Statements of Cash Flows..................................3
Notes to Unaudited 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 1. LEGAL PROCEEDINGS..........................................................................9
Item 6. EXHIBITS AND REPORTS ON FORM 8-K...........................................................9
SIGNATURE...................................................................................................10
</TABLE>
<PAGE>
CORT BUSINESS SERVICES CORPORATION AND SUBSIDIARY
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
<TABLE>
<CAPTION>
DECEMBER 31, JUNE 30,
1998 1999
-------- ----------
(UNAUDITED)
<S> <C> <C>
ASSETS
Cash and cash equivalents $ 703 $ 152
Accounts receivable, net 14,585 18,643
Prepaid expenses 5,918 6,142
Rental furniture, net 189,059 202,625
Property, plant and equipment, net 43,861 44,126
Other receivables and assets, net 3,048 3,526
Investment 3,000 3,300
Goodwill, net 72,722 77,059
-------- --------
Total assets $332,896 $355,573
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Accounts payable $ 3,417 $ 6,259
Accrued expenses 21,076 24,105
Deferred revenue and security deposits 21,122 23,325
Revolving credit facility 90,800 91,200
Deferred income taxes 20,819 20,574
-------- --------
157,234 165,463
Stockholders' equity 175,662 190,110
-------- --------
Total liabilities and stockholders' equity $332,896 $355,573
======== ========
</TABLE>
See accompanying notes to unaudited condensed consolidated financial statements.
1
<PAGE>
CORT BUSINESS SERVICES CORPORATION AND SUBSIDIARY
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts)
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30, JUNE 30,
-------------------- ----------------------
1998 1999 1998 1999
------- ------- -------- --------
<S> <C> <C> <C> <C>
Revenue:
Furniture rental $65,065 $73,096 $127,879 $144,891
Furniture sales 13,065 14,970 25,694 29,539
------- ------- -------- --------
Total revenue 78,130 88,066 153,573 174,430
------- ------- -------- --------
Operating costs and expenses:
Cost of furniture rental 11,781 12,921 22,868 25,410
Cost of furniture sales 7,921 9,439 15,536 18,668
Selling, general and administrative expenses 45,074 51,528 89,240 102,820
------- ------- -------- --------
Total costs and expenses 64,776 73,888 127,644 146,898
------- ------- -------- --------
Operating earnings 13,354 14,178 25,929 27,532
Interest expense 2,071 1,354 4,038 2,775
------- ------- -------- --------
Income before income taxes 11,283 12,824 21,891 24,757
Income taxes 4,763 5,382 9,180 10,422
------- ------- -------- --------
Net income $ 6,520 $ 7,442 $ 12,711 $ 14,335
======= ======= ======== ========
Earnings per common share $ .50 $ .57 $ .98 $ 1.09
Weighted average number of common
Shares used in computation 13,022 13,095 12,973 13,092
Earnings per common share - assuming dilution $ .48 $ .55 $ .94 $ 1.07
Weighted average number of common
Shares used in computation - assuming dilution 13,507 13,432 13,490 13,414
</TABLE>
2
<PAGE>
CORT BUSINESS SERVICES CORPORATION AND SUBSIDIARY
UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS OF CASHFLOWS
(in thousands)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30,
-----------------------
1998 1999
-------- --------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 12,711 $ 14,335
Proceeds of disposals of rental furniture in
excess of gross profit 14,791 18,819
Adjustments to reconcile net income to net cash provided by operating
activities:
Depreciation and amortization:
Rental furniture depreciation 17,415 19,205
Other depreciation and amortization 2,952 3,608
Goodwill amortization 900 1,206
Amortization of debt issuance costs 376 32
Rental furniture inventory shrinkage 1,540 1,383
Changes in operating accounts, net 3,607 1,906
-------- --------
Net cash provided by operating activities 54,292 60,494
-------- --------
Cash flows from investing activities:
Purchases of rental furniture (46,136) (50,754)
Portfolio acquisitions (9,373) (6,780)
Purchase of investment (3,000) (300)
Purchases of property, plant and equipment (5,570) (3,936)
Sales of property, plant and equipment 107 213
-------- --------
Net cash used by investing activities (63,972) (61,557)
-------- --------
Cash flows from financing activities:
Borrowings on the revolving credit facility 33,200 31,100
Repayments on the revolving credit facility (23,400) (30,700)
Issuance of common stock 759 112
-------- --------
Net cash provided by financing activities 10,559 512
-------- --------
Net increase (decrease) in cash and cash equivalents 879 (551)
Cash and cash equivalents at beginning of period -- 703
-------- --------
Cash and cash equivalents at end of period $ 879 $ 152
======== ========
Supplemental disclosure of cash flow information:
Interest paid $ 3,509 $ 2,743
Income taxes paid 5,373 8,324
Tax benefit from exercise of stock options 1,683 73
</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
(in thousands)
(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, 1999, and the
results of operations and cash flows for the six months ended June 30, 1999
and 1998. The results of operations for the six months ended June 30, 1999
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 1998 Annual Report on Form 10-K.
(2) INCOME TAXES
The Internal Revenue Service ("IRS") had 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 included 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 indicated to the Company that it reached an agreement with the
IRS regarding a settlement of the proposed adjustments. The bankruptcy
court handling Fairwood Corporation's bankruptcy filing approved the terms
of the settlement. The total tax liability of the Former Group under the
terms of the settlement was approximately $5 million, including interest.
In the second quarter of 1999, full payment under the agreement was made to
the IRS.
(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,
---------------------------- ----------------------------
1998 1999 1998 1999
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Weighted average shares outstanding
during the period 13,021,664 13,095,366 12,973,101 13,092,077
Effect of dilutive securities:
Stock options
446,881 337,029 467,856 322,287
Warrants 38,841 -- 48,715 --
----------- ----------- ----------- -----------
Weighted average common shares -
assuming dilution 13,507,386 13,432,395 13,489,672 13,414,364
----------- ----------- ----------- -----------
Net income applicable to common shares $ 6,520,000 $ 7,442,000 $12,711,000 $14,335,000
=========== =========== =========== ===========
Earnings per common share $ .50 $ .57 $ .98 $ 1.09
=========== =========== =========== ===========
Earnings per common share - assuming dilution $ .48 $ .55 $ .94 $ 1.07
=========== =========== =========== ===========
</TABLE>
(4) OTHER INFORMATION
On March 25, 1999 the Company entered into an Agreement and Plan of Merger,
as amended as of July 26,
4
<PAGE>
CORT BUSINESS SERVICES CORPORATION AND SUBSIDIARY
MANAGEMENTS DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(dollar figures in thousands)
1999, among the Company, CBF Holding LLC, a Delaware limited liability
company, and CBF Mergerco Inc., a Delaware corporation (the "Merger
Agreement"). Pursuant to the Merger Agreement, an investor group that
includes Bruckmann, Rosser, Sherrill & Co. II, L.P. ("BRS") and members of
the Company's management team would acquire the Company for consideration
of $24.00 per share in cash and $2.50 per share in liquidation value of a
new series of preferred stock. Citicorp Venture Capital, Ltd. ("CVC") will
retain a portion of its investment and thereby provide equity financing to
the resulting corporation.
The merger agreement requires approval by the holders of a majority of the
Company's voting stock and, in addition, approval by the holders of a
majority of the outstanding voting stock who are not affiliated with BRS,
CVC or other members of the investor group. The merger is also subject to
other conditions, including receipt of necessary financing, a limitation on
the number of dissenting shareholders and certain regulatory approvals. The
Company has received copies of commitment and highly confident letters for
the debt financing required to complete the transaction. There can be no
assurance that the merger will be completed, or that the merger will be
completed as contemplated.
On July 29, 1999, the Company mailed a Proxy Statement/Prospectus to
holders of record on July 22, 1999 for a Special Meeting to be held on
August 18, 1999 to consider the merger.
Three alleged stockholders have separately filed complaints in Delaware
Chancery Court against the Company, each of the Company's directors, and
Citicorp Venture Capital Ltd. One of the three initial complaints also
includes BRS as an additional defendant. A second complaint was amended and
added BRS as defendant. Each complaint alleges breaches of fiduciary duties
in connection with the directors' approval of the merger and other claims.
The complaints purport to be class action complaints and the plaintiffs
seek to enjoin the transactions contemplated by the Merger Agreement or, in
the alternative, to recover compensatory damages. The Company believes that
the claims are without merit.
5
<PAGE>
CORT BUSINESS SERVICES CORPORATION AND SUBSIDIARY
MANAGEMENTS DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(dollar figures in thousands)
RESULTS OF OPERATIONS
THREE MONTHS ENDED JUNE 30, 1999 AS COMPARED TO THREE MONTHS ENDED JUNE 30, 1998
REVENUE
Total revenue increased 12.7% to $88,066 for the three months ended June 30,
1999 from $78,130 for the three months ended June 30, 1998. Furniture rental
revenue for the three months ended June 30, 1999 was $73,096 a 12.3% increase
from $65,065 in 1998. Rental revenue growth before the impact of acquisitions
and trade show operations was approximately 1%. Furniture sales increased 14.6%
to $14,970 for the three months ended June 30, 1999. Furniture sales growth
before the impact of acquisitions and trade show operations was approximately
7%. This increase reflects the Company's continued efforts to maintain showroom
quality of its rental funiture as well as reduce the level of idle inventory.
OPERATING COSTS AND EXPENSES
Cost of furniture rental has decreased from 18.1% of furniture rental revenue in
1998 to 17.7% of furniture rental revenue in 1999. This improvement is primarily
attributed to a reduction in idle rental furniture as well as an increased
volume in the tradeshow operations which has a lower cost of furniture rental.
Cost of furniture sales increased from 60.6% of furniture sales revenue in 1998
to 63.1% in 1999.
Selling, general and administrative expenses totaled $51,528 or 58.5% of total
revenue for the quarter ended June 30, 1999 as compared to $45,074 or 57.7% of
total revenue for the quarter ended June 30, 1998. This increase as a percentage
of revenue is attributed to investments in personnel and facilities which the
Company believes are an integral part of its plans for future growth.
OPERATING EARNINGS
As a result of the changes in revenue, operating costs and expenses discussed
above, operating earnings were $14,178 or 16.1% of total revenue in the second
quarter of 1999 compared to $13,354 or 17.1% of total revenue in the second
quarter of 1998.
SIX MONTHS ENDED JUNE 30, 1999 AS COMPARED TO SIX MONTHS ENDED JUNE 30, 1998
REVENUE
Total revenue increased 13.6% to $174,430 for the six months ended June 30, 1999
from $153,573 for the six months ended June 30, 1998. Furniture rental revenue
for the six months ended June 30, 1999 was $144,891, a 13.3% increase from
$127,879 in 1998. Rental revenue growth before the impact of acquisitions and
trade show operations was approximately 1%. Furniture sales increased 15.0% to
$29,539 for the six months ended June 30, 1999. Furniture sales growth before
the impact of acquisitions and trade show operations was approximately 9%. This
increase reflects the Company's continued efforts to maintain showroom quality
of its rental funiture as well as reduce the level of idle inventory.
OPERATING COSTS AND EXPENSES
Cost of furniture rental has decreased from 17.9% of furniture rental revenue in
1998 to 17.5% of furniture rental revenue in 1999. This improvement is primarily
attributed to a reduction in idle rental furniture as well as an increased
volume in the tradeshow operations which has a lower cost of furniture rental.
Cost of furniture sales increased from 60.5% of furniture sales revenue in 1998
to 63.2% in 1999.
6
<PAGE>
CORT BUSINESS SERVICES CORPORATION AND SUBSIDIARY
MANAGEMENTS DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(dollar figures in thousands)
Selling, general and administrative expenses totaled $102,820 or 58.9% of total
revenue for the six months ended June 30, 1999 as compared to $89,240 or 58.1%
of total revenue for the same six months of 1998. This increase as a percentage
of revenue is attributed to investments in personnel and facilities which the
Company believes are an integral part of its plans for future growth.
OPERATING EARNINGS
As a result of the changes in revenue, operating costs and expenses discussed
above, operating earnings were $27,532 or 15.8% of total revenue for the six
months ended June 30, 1999 compared to $25,929 or 16.9% of total revenue for the
six months ended June 30, 1998.
FURNITURE PURCHASES
Furniture purchases, which totaled $50,754 in the six months ended June 30,
1999, increased slightly from the $46,136 purchased in the six months ended June
30, 1998. The majority of this increase is due to purchases for the ongoing
operations of acquired businesses.
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
restricts 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 $5,463 and $3,723 in the six
months ended June 30, 1998 and 1999, respectively.
During the six months ended June 30, 1998 and 1999, net cash provided by
operations was $54,292 and $60,494, respectively. During the six months ended
June 30, 1998 and 1999, net cash used by investing activities was $63,972 and
$61,557, respectively, consisting primarily of purchases of rental furniture.
During the six months ended June 30, 1998 and 1999, net cash provided by
financing activities was $10,559 and $512, respectively.
CFR has available a revolving line of credit of $125,000 to meet acquisition and
expansion needs as well as seasonal working capital and general corporate
requirements. The Company had $29,472 available under the revolving credit
facility at June 30, 1999. The Company believes that future cash flows from
operations, together with the borrowings available under the revolving credit
facility will provide the Company with sufficient liquidity and financial
resources to finance its growth and satisfy its working capital requirements
through the term of the revolving credit facility.
7
<PAGE>
CORT BUSINESS SERVICES CORPORATION AND SUBSIDIARY
MANAGEMENTS DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(dollar figures in thousands)
YEAR 2000 COMPLIANCE
As is the case with other companies using computers in their operations, the
Company is faced with the task of addressing the Year 2000 issue. The Year 2000
issue arises from the widespread use of computer programs that rely on two-digit
codes to perform computations or decision-making functions. The Company has done
a comprehensive review of its significant computer programs to identify the
systems that would be affected by the Year 2000 issue.
The Company relies on computer-based technology and utilizes a variety of
third-party hardware and software. The Company's rental and retail functions,
including lease writing, inventory control, billing and accounts receivable use
the software called "RTR". This software, which is the Company's primary
operating system, has been recently developed and installed in most of the
Company's operations. The RTR software has been modified for Year 2000
compliance, but the modified version has not yet been installed in the
operations of the Company. The installation of RTR, as well as the Year 2000
modification, is expected to be completed in the beginning of the fourth quarter
of 1999.
The Company utilizes third party software for administrative functions such as
accounting, payroll and human resources. The Company expects to upgrade the
administrative function third party software to the Year 2000 version or install
new software which is Year 2000 compliant by the end of the third quarter of
1999. The Company currently estimates the cost of modifying its computer systems
to be Year 2000 compliant to be approximately $300; the majority of these costs
will be incurred by September 30, 1999.
The Company is still in the process of reviewing its Year 2000 exposure to
customers and vendors. The Company is not dependent on any one supplier or
customer for more than 10% of its rental furniture or revenue, respectively. As
part of its contingency planning efforts, the Company is sending inquiries as to
the Year 2000 readiness to selected vendors in order to identify any significant
exposures that may exist and establish alternative sources or strategies where
necessary. The Company is currently unaware of any Year 2000 problems faced by
any customers or vendors that are likely to have a material adverse effect on
the Company.
In worst-case scenario, if the Company's operating system was not to be ready
for Year 2000, the Company would continue to make deliveries, record revenue and
bill customers utilizing a personal computer until the computer system was
ready. This would not stop the operations of the Company and currently is done
whenever a location experiences temporary down time.
There can be no guarantee that the foregoing cost estimates or deadlines will be
achieved and actual results could differ from current expectation. Specific
factors that might cause differences include, but are not limited to, the
ability of customers, suppliers, and other companies on which the Company's
operations rely to modify or convert their systems to be Year 2000 ready, the
ability of the Company to locate and correct all relevant computer code, or
similar uncertainties. The Company is in the process of developing contingency
plans for such scenarios.
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 1. LEGAL PROCEEDINGS
Three alleged stockholders have separately filed complaints in Delaware
Chancery Court against the Company, each of the Company's directors,
and Citicorp Venture Capital Ltd. One of the three initial complaints
also includes Bruckmann, Rosser, Sherrill & Co. II, L.P. as an
additional defendant. A second complaint was amended and added BRS as
defendant. Each complaint alleges breaches of fiduciary duties in
connection with the directors' approval of the merger and other claims.
The complaints purport to be class action complaints and the plaintiffs
seek to enjoin the transactions contemplated by the Merger Agreement
or, in the alternative, to recover compensatory damages. The Company
believes that the claims are without merit. Copies of each complaint
are attached as Exhibit 99.4, Exhibit 99.5 and Exhibit 99.6 to the
Company's Form 8-K that was filed on April 29, 1999. The amended
complaint is attached as Exhibit 99.7 to the Company's Amendment No. 2
to Form S-4 filed on July 26, 1999.
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits (see Index on page E-1)
(b) Reports on Form 8-K:
On April 29, 1999, the Company filed Form 8-K disclosing the
issuance of a press release announcing its financial results
for the first quarter ended March 31, 1999. The press release
also disclosed that the investor group for the merger received
commitment and highly confident letters for the debt financing
required to complete the transaction announced March 26, 1999.
In addition, the Company confirmed that three alleged
stockholders have separately filed complaints in Delaware
Chancery Court against the Company, each of the Company's
directors, and Citicorp Venture Capital Ltd. One of the three
initial complaints also includes Bruckmann, Rosser, Sherrill &
Co. II, L.P. as an additional defendant. Each complaint
alleges breaches of fiduciary duties in connection with the
directors' approval of the merger and other claims.
9
<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 4, 1999 By: /s/ FRANCES ANN ZIEMNIAK
------------------------------------
Frances Ann Ziemniak
Executive Vice President, Chief
Financial Officer and Secretary
(PRINCIPAL FINANCIAL OFFICER)
Date: August 4, 1999 By: /s/ MAUREEN C. THUNE
------------------------------------
Maureen C. Thune
Vice President, Corporate Controller
and Assistant Secretary
(PRINCIPAL ACCOUNTING OFFICER)
10
<PAGE>
CORT BUSINESS SERVICES CORPORATION AND SUBSIDIARY
EXHIBIT INDEX
Exhibit
Number Description Page
------ ----------- ----
2.1 Agreement and Plan of Merger, dated as of March 25, 1999,
among the Company, CBF Holding LLC and CBF Mergerco, Inc.;
incorporated by reference to Exhibit 2.1 the Company's Form
8-K, filed on March 29, 1999
2.2 First Amendment to Agreement and Plan of Merger dated as of
July 26, 1999 among the Company, CBF Holding LLC and CBF
Mergerco, Inc.; incorporated by reference to Annex A of
Amendment No. 2 to Form S-4 filed July 26, 1999
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
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 Subsidiary
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 Subsidiary 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
E-1
<PAGE>
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 Third Amendment; incorporated by reference to
Exhibit 10.7 to the Company's Quarterly Report on Form 10-Q
for the fiscal quarter ended March 31, 1999
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 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
10.10 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
10.11 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
10.12 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
10.13 Letter Agreement dated March 25, 1999 between the Company and
Paul N. Arnold; incorporated by reference to Exhibit 10.13 to
the Company's Quarterly Report on Form 10-Q for the fiscal
quarter ended March 31, 1999
10.14 Letter Agreement dated March 25, 1999 between the Company and
Anthony J. Bellerdine; incorporated by reference to Exhibit
10.14 to the Company's Quarterly Report on Form 10-Q for the
fiscal quarter ended March 31, 1999
10.15 Letter Agreement dated March 25, 1999 between the Company and
Steven D. Jobes; incorporated by reference to Exhibit 10.15 to
the Company's Quarterly Report on Form 10-Q for the fiscal
quarter ended March 31, 1999
10.16 Letter Agreement dated March 25, 1999 between the Company and
Lloyd Lenson; incorporated by reference to Exhibit 10.16 to
the Company's Quarterly Report on Form 10-Q for the fiscal
quarter ended March 31, 1999
10.17 Letter Agreement dated March 25, 1999 between the Company and
Kenneth W. Hemm; incorporated by reference to Exhibit 10.17 to
the Company's Quarterly Report on Form 10-Q for the fiscal
quarter ended March 31, 1999
E-2
<PAGE>
10.18 Letter Agreement dated March 25, 1999 between the Company and
Frances Ann Ziemniak; incorporated by reference to Exhibit
10.18 to the Company's Quarterly Report on Form 10-Q for the
fiscal quarter ended March 31, 1999
11.1 Statement re computation of per share earnings; incorporated
by reference to page 4 of the Company's Form 10-Q for the
fiscal quarter ended June 30, 1999
27 Financial Data Schedules
E-3
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<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> JUN-30-1999
<CASH> 152
<SECURITIES> 0
<RECEIVABLES> 21,408
<ALLOWANCES> 2,765
<INVENTORY> 202,625
<CURRENT-ASSETS> 0
<PP&E> 77,465
<DEPRECIATION> 33,339
<TOTAL-ASSETS> 355,573
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0
0
<COMMON> 131
<OTHER-SE> 189,978
<TOTAL-LIABILITY-AND-EQUITY> 355,573
<SALES> 29,539
<TOTAL-REVENUES> 174,430
<CGS> 18,668
<TOTAL-COSTS> 44,078
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<INCOME-PRETAX> 24,757
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