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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 September 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 November 12, 1999
----- -----------------
Common Stock, $.01 par value 13,099,300
Class B Common Stock, $.01 par value - 0 -
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<PAGE>
CORT BUSINESS SERVICES CORPORATION
INDEX TO FORM 10-Q
Page No.
--------
Part I. FINANCIAL INFORMATION
Item 1. FINANCIAL STATEMENTS
Condensed Consolidated Balance Sheets ............................. 1
Unaudited Condensed Consolidated Statements of Operations ......... 2
Unaudited Condensed Consolidated Statements of Stockholders' Equity 3
Unaudited Condensed Consolidated Statements of Cash Flows ......... 4
Notes to Unaudited Condensed Consolidated Financial Statements .... 5
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS ......................... 7
Part II. OTHER INFORMATION
Item 1. LEGAL PROCEEDINGS .......................................... 10
Item 6. EXHIBITS AND REPORTS ON FORM 8-K............................ 10
SIGNATURE.............................................................. 11
<PAGE>
CORT BUSINESS SERVICES CORPORATION AND SUBSIDIARY
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
<TABLE>
<CAPTION>
December 31, September 30,
1998 1999
------------ -------------
(unaudited)
ASSETS
<S> <C> <C>
Cash and cash equivalents ......................... $ 703 $ 1,210
Accounts receivable, net .......................... 14,585 19,801
Prepaid expenses .................................. 5,918 6,172
Rental furniture, net ............................. 189,059 212,487
Property, plant and equipment, net ................ 43,861 43,163
Other receivables and assets, net ................. 3,048 3,032
Investment ........................................ 3,000 18,246
Goodwill, net ..................................... 72,722 76,438
-------- --------
Total assets ................................. $332,896 $380,549
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable .................................. $ 3,417 $ 6,912
Accrued expenses .................................. 21,076 29,887
Deferred revenue and security deposits ............ 21,122 23,260
Revolving credit facility ......................... 90,800 93,800
Deferred income taxes ............................. 20,819 20,574
-------- --------
Total liabilities ............................ 157,234 174,433
Stockholders' equity .............................. 175,662 206,116
-------- --------
Total liabilities and stockholders' equity ... $332,896 $380,549
======== ========
</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 Nine Months Ended
September 30, September 30,
----------------- -------------------
1998 1999 1998 1999
------- ------- -------- --------
<S> <C> <C> <C> <C>
Revenue:
Furniture rental ........................................... $68,477 $74,352 $196,356 $219,243
Furniture sales ............................................ 14,254 15,348 39,948 44,887
------- ------- -------- --------
Total revenue .......................................... 82,731 89,700 236,304 264,130
------- ------- -------- --------
Operating costs and expenses:
Cost of furniture rental ................................... 12,358 13,619 35,226 39,029
Cost of furniture sales .................................... 8,698 9,394 24,234 28,062
Selling, general and administrative expenses ............... 47,794 53,140 137,034 155,960
------- ------- -------- --------
Total costs and expenses ............................... 68,850 76,153 196,494 223,051
------- ------- -------- --------
Operating earnings ..................................... 13,881 13,547 39,810 41,079
Interest expense ............................................. 2,126 1,484 6,164 4,259
------- ------- -------- --------
Income before income taxes ............................. 11,755 12,063 33,646 36,820
Income taxes ................................................. 4,960 5,072 14,140 15,494
------- ------- -------- --------
Income before extraordinary loss ....................... 6,795 6,991 19,506 21,326
------- ------- -------- --------
Extraordinary loss on early retirement of debt,
net of income tax benefit of $1,672 ........................ 2,508 -- 2,508 --
------- ------- -------- --------
Net Income ............................................. $ 4,287 $ 6,991 $ 16,998 $ 21,326
======= ======= ======== ========
Earnings per common share before extraordinary loss:
Basic .................................................. $ .52 $ .53 $ 1.50 $ 1.63
Diluted ................................................ $ .50 $ .52 $ 1.45 $ 1.59
Earnings per common share:
Basic .................................................. $ .33 $ .53 $ 1.31 $ 1.63
Diluted ................................................ $ .32 $ .52 $ 1.26 $ 1.59
Weighted average number of common shares used in computations:
Basic .................................................. 13,050 13,097 12,999 13,094
Diluted ................................................ 13,467 13,439 13,486 13,423
</TABLE>
See accompanying notes to unaudited condensed consolidated financial statements.
2
<PAGE>
CORT BUSINESS SERVICES CORPORATION AND SUBSIDIARY
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDER'S EQUITY
(in thousands)
<TABLE>
<CAPTION>
Nine Months Ended
September 30,
---------------------
1998 1999
-------- --------
<S> <C> <C>
Common stock, par value:
Balance, beginning of period .......................... $ 129 $ 131
Issuance of common stock from exercise of warrants .... 1 --
Issuance of common stock from exercise of stock options 1 --
-------- --------
Balance, end of period ................................ $ 131 $ 131
-------- --------
Additional paid-in capital:
Balance, beginning of period .......................... $103,007 $105,940
Issuance of common stock from exercise of warrants .... 11 --
Issuance of common stock from exercise of stock options 725 50
Income tax benefit from exercise of stock options ..... 2,121 110
-------- --------
Balance, end of period ................................ $105,864 $106,100
======== ========
Retained earnings:
Balance, beginning of period........................... $ 46,196 $ 69,591
Comprehensive income:
Net income .......................................... 16,998 21,326
Net unrealized investment gain ...................... -- 8,968
-------- --------
Total comprehensive income ........................ 16,998 30,294
-------- --------
Balance, end of period ................................ $ 63,194 $ 99,885
======== ========
Total stockholder's equity .............................. $169,189 $206,116
======== ========
</TABLE>
See accompanying notes to unaudited condensed consolidated financial statements.
3
<PAGE>
CORT BUSINESS SERVICES CORPORATION AND SUBSIDIARY
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASHFLOWS
<TABLE>
<CAPTION>
Nine Months Ended
September 30,
---------------------
1998 1999
-------- ---------
<S> <C> <C>
Cash flows from operating activities:
Net income .......................................... $ 16,998 $ 21,326
Proceeds of disposals of rental furniture in
excess of gross profit ............................ 22,925 27,962
Adjustments to reconcile net income to net cash
provided by operating activities:
Extraordinary loss on early retirement of debt .. 2,508 --
Depreciation and amortization:
Rental furniture depreciation ................. 27,051 29,601
Other depreciation and amortization ........... 4,535 5,450
Goodwill amortization ......................... 1,397 1,826
Amortization of debt issuance costs ........... 550 45
Rental furniture inventory shrinkage ............ 2,152 1,887
Changes in operating accounts, net .............. 152 2,139
-------- ---------
Net cash provided by operating activities .... 78,268 90,236
-------- ---------
Cash flows from investing activities:
Purchases of rental furniture ....................... (69,962) (80,662)
Portfolio acquisitions .............................. (30,224) (7,281)
Purchase of investment .............................. (3,000) (300)
Purchases of property, plant and equipment .......... (7,430) (4,704)
Sales of property, plant and equipment .............. 104 168
-------- ---------
Net cash used by investing activities ........ (110,512) (92,779)
-------- ---------
Cash flows from financing activities:
Borrowings on the line of credit .................... 120,000 48,600
Repayments on the line of credit .................... (33,900) (45,600)
Issuance of common stock ............................ 738 50
Repayments of long term debt ........................ (49,932) --
Payments to retire debt ............................. (3,503) --
-------- ---------
Net cash provided by financing activities ..... 33,403 3,050
-------- ---------
Net increase in cash and cash equivalents ..... 1,159 507
Cash and cash equivalents at beginning of period ...... -- 703
-------- ---------
Cash and cash equivalents at end of period ............ $ 1,159 $ 1,210
======== =========
Supplemental disclosure of cash flow information:
Interest paid ....................................... $ 7,306 $ 4,659
Income taxes paid ................................... 9,602 13,114
Tax benefit from exercise of stock options .......... 2,121 110
</TABLE>
See accompanying notes to unaudited condensed consolidated financial statements.
4
<PAGE>
CORT BUSINESS SERVICES CORPORATION AND SUBSIDIARY
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(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 September 30, 1999, and the
results of operations, cash flows and stockholder's equity for the nine
months ended September 30, 1999 and 1998. The results of operations for the
nine months ended September 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) Earnings Per Share
------------------
The following table sets forth the computation of basic and diluted
earnings per share:
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
----------------------- -------------------------
1998 1999 1998 1999
---------- ---------- ----------- -----------
<S> <C> <C> <C> <C>
Weighted average shares outstanding
during the period ........................ 13,049,954 13,097,053 12,999,000 13,093,754
Effect of dilutive securities:
Stock options ............................ 393,741 341,584 446,794 329,412
Warrants ................................. 23,271 -- 40,321 --
---------- ---------- ----------- -----------
Weighted average common shares --
assuming dilution ........................ 13,466,966 13,438,638 13,486,115 13,423,166
========== ========== =========== ===========
Income before extraordinary loss ........... $6,795,000 $6,991,000 $19,506,000 $21,326,000
Extraordinary loss, net .................... 2,508,000 -- 2,508,000 --
---------- ---------- ----------- -----------
Net income ................................. $4,287,000 $6,991,000 $16,998,000 $21,326,000
========== ========== =========== ===========
Earnings per common share:
Income before extraordinary loss ......... $ .52 $ .53 $ 1.50 $ 1.63
Extraordinary loss ....................... (.19) -- (.19) --
---------- ---------- ----------- -----------
Net income ............................... $ .33 $ .53 $ 1.31 $ 1.63
========== ========== =========== ===========
Earnings per common share --
assuming dilution:
Income before extraordinary loss ....... $ .50 $ .52 $ 1.45 $ 1.59
Extraordinary loss ..................... (.18) -- (.19) --
---------- ---------- ----------- -----------
Net income ............................. $ .32 $ .52 $ 1.26 $ 1.59
========== ========== =========== ===========
</TABLE>
5
<PAGE>
CORT BUSINESS SERVICES CORPORATION AND SUBSIDIARY
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(3) Other Information
-----------------
On March 25, 1999, the Company entered into an Agreement and Plan of
Merger, amended and restated as of August 12, 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 included Bruckmann, Rosser, Sherrill &
Co. II, L.P. ("BRS") and members of the Company's management team would
have acquired the Company for consideration of $25.00 per share in cash and
$3.00 per share in liquidation value of a new series of preferred stock.
Citicorp Venture Capital Ltd. ("CVC") would have retained a portion of its
investment, thereby providing equity financing to the resulting
corporation. On November 4, 1999, the Merger Agreement was mutually
terminated due to insufficient support from the Company's public
shareholders and the weakness of the high-yield debt market.
As a result of the termination of the Merger Agreement, in the fourth
quarter, the Company will record a non-recurring charge, estimated at $2.2
million, for expenses it incurred relating to 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.
(4) Investment
----------
The Company's investment was made in SpringStreet.com. SpringStreet.com
merged with HomeStore.com and the latter made an initial public offering in
August 1999. The Company has recorded this investment as a marketable
security available for sale and as such, the unrealized gain, net of taxes,
was recorded this quarter. The Company's investment is subject to a
standard lock up agreement until February 2000 and ten percent of the
Company's investment is subject to certain restrictions under the merger
agreement between SpringStreet.com and HomeStore.com until August 2000.
6
<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 September 30, 1999 as compared to three months ended
September 30, 1998
Revenue
Total revenue increased 8.4% to $89,700 for the three months ended September 30,
1999 from $82,731 for the three months ended September 30, 1998. Furniture
rental revenue for the three months ended September 30, 1999 was $74,352, an
8.6% increase from $68,477 in 1998. Rental revenue growth before the impact of
acquisitions and trade show operations was approximately 2%. This growth rate
includes a significant government contract that will positively impact the next
four quarters. Furniture sales increased 7.7% to $15,348 for the three months
ended September 30, 1999. Furniture sales growth before the impact of
acquisitions and trade show operations was approximately 1%.
Operating Costs and Expenses
Cost of furniture rental has increased from 18.0% of furniture rental revenue in
1998 to 18.3% of furniture rental revenue in 1999. Cost of furniture sales
increased from 61.0% of furniture sales revenue in 1998 to 61.2% in 1999.
Selling, general and administrative expenses totaled $53,140 or 59.2% of total
revenue for the quarter ended September 30, 1999 as compared to $47,794 or 57.8%
of total revenue for the quarter ended September 30, 1998. This increase, as a
percentage of revenue, is attributed to investments in personnel, facilities,
and the Internet that 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 $13,546 or 15.1% of total revenue in the third
quarter of 1999 compared to $13,881 or 16.8% of total revenue in the third
quarter of 1998.
Nine months ended September 30, 1999 as compared to nine months ended September
30, 1998
Revenue
Total revenue increased 11.8% to $264,130 for the nine months ended September
30, 1999 from $236,304 for the nine months ended September 30, 1998. Furniture
rental revenue for the nine months ended September 30, 1999 was $219,243, an
11.7% increase from $196,356 in 1998. Rental revenue growth before the impact of
acquisitions and trade show operations was approximately 2%. This growth rate
includes a significant government contract that will positively impact the next
four quarters. Furniture sales increased 12.4% to $44,887 for the nine months
ended September 30, 1999. Furniture sales growth before the impact of
acquisitions and trade show operations was approximately 6%. This increase
reflects the Company's continued efforts to maintain showroom quality of its
rental furniture 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 17.8% of furniture rental revenue in 1999. Cost of furniture sales
increased from 60.7% of furniture sales revenue in 1998 to 62.5% in 1999. In the
first half of 1999, the Company had lower sales margins as a result of
aggressive clearance sales designed to lower the level of idle inventory.
7
<PAGE>
CORT BUSINESS SERVICES CORPORATION AND SUBSIDIARY
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONT.)
(Dollar figures in thousands)
Selling, general and administrative expenses totaled $155,960 or 59.1% of total
revenue for the nine months ended September 30, 1999 as compared to $137,034 or
58.0% of total revenue for the same nine months of 1998. This increase, as a
percentage of revenue, is attributed to investments in personnel, facilities,
and the Internet that 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 $41,079 or 15.6% of total revenue for the nine
months ended September 30, 1999 compared to $39,810 or 16.8% of total revenue
for the nine months ended September 30, 1998.
Furniture Purchases
Furniture purchases, which totaled $80,662 in the nine months ended September
30, 1999, increased from the $69,962 purchased in the nine months ended
September 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 that 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 $7,326 and $4,536 in the nine
months ended September 30, 1998 and 1999, respectively.
During the nine months ended September 30, 1998 and 1999, net cash provided by
operations was $78,268 and $90,236, respectively. During the nine months ended
September 30, 1998 and 1999, net cash used by investing activities was $110,512
and $92,779, respectively, consisting primarily of purchases of rental
furniture. During the nine months ended September 30, 1998 and 1999, net cash
provided by financing activities was $33,403 and $3,050 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 $26,811 available under the revolving credit
facility at September 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.
8
<PAGE>
CORT BUSINESS SERVICES CORPORATION AND SUBSIDIARY
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONT.)
(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. The installation of RTR, as well as the Year 2000 modification, was
completed in October 1999.
The Company utilizes third party software for administrative functions such as
accounting, payroll and human resources. The Company completed its upgrade of
the administrative function third party software to the Year 2000 in October
1999. The Company estimates its cost for modifying its computer systems to be
Year 2000 compliant was immaterial.
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 sent 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.
While the Company believes its significant computer systems are Year 2000
compliant, it cannot predict the outcome of its Year 2000 modifications. In a
worst-case scenario, 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.
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.
9
<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.P.
("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 with
CBF Mergerco Inc. under the Agreement and Plan of Merger, amended and
restated as of August 12, 1999 ("Merger Agreement") 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:
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: November 15, 1999 By: /s/ Frances Ann Ziemniak
--------------------- ------------------------------
Frances Ann Ziemniak
Executive Vice President,
Chief Financial Officer
and Secretary
(Principal financial officer)
Date: November 15, 1999 By: /s/ Maureen C. Thune
--------------------- ------------------------------
Maureen C. Thune
Vice President, Corporate
Controller and Assistant
Secretary
(Principal accounting officer)
11
<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
2.3 Termination letter dated November 4, 1999 from the Company to
CBF Holding LLC and CBF Mergerco Inc.
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
September 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>
Exhibit
Number Description 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 September 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
September 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 September 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
E-2
<PAGE>
Exhibit
Number Description Page
- ------- ----------- ----
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
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 5 of the Company's Form 10-Q for the
fiscal quarter ended September 30, 1999
27 Financial Data Schedules
E-3
CORT BUSINESS SERVICES CORPORATION
4401 Fair Lakes Court
Fairfax, Virginia 22033
November 4, 1999
CBF Holding LLC CBF Mergerco Inc.
c/o Bruckmann, Rosser, Sherrill & Co., Inc.
126 East 56th Street
New York, New York 10022
Attention: Bruce Bruckmann
Re: CORT Business Services Corporation
----------------------------------
Dear Bruce:
Reference is made to the Amended and Restated Agreement and Plan of Merger
among CBF Holding LLC, CBF Mergerco Inc. and CORT Business Services Corporation
(the "Company") dated as of August 12, 1999 (the "Merger Agreement"). This is to
confirm the parties' agreement to terminate the Merger Agreement as of the date
hereof and to treat this termination for purposes of Section 7.3 as a
termination under Section 7.1(c)(ii).
By signing below, the parties agree to the foregoing on behalf of
themselves and their respective successors and assigns.
Sincerely,
CORT BUSINESS SERVICES CORPORATION
By: /s/ Paul N. Arnold
----------------------
ACKNOWLEDGED AND AGREED TO:
CBF HOLDING LLC
By: /s/ Bruce C. Bruckmann
----------------------
CBF MERGERCO INC.
By: /s/ Bruce C. Bruckmann
----------------------
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
Art. 5 FDS for 1999 10-Q
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> SEP-30-1999
<CASH> 1,210
<SECURITIES> 18,246
<RECEIVABLES> 22,771
<ALLOWANCES> 2,970
<INVENTORY> 212,487
<CURRENT-ASSETS> 0
<PP&E> 78,205
<DEPRECIATION> 35,042
<TOTAL-ASSETS> 380,549
<CURRENT-LIABILITIES> 0
<BONDS> 0
0
0
<COMMON> 131
<OTHER-SE> 205,985
<TOTAL-LIABILITY-AND-EQUITY> 380,549
<SALES> 44,887
<TOTAL-REVENUES> 264,130
<CGS> 28,062
<TOTAL-COSTS> 67,091
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 1,138
<INTEREST-EXPENSE> 4,259
<INCOME-PRETAX> 36,820
<INCOME-TAX> 15,494
<INCOME-CONTINUING> 21,326
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 21,326
<EPS-BASIC> 1.63
<EPS-DILUTED> 1.59
</TABLE>
