CANTON, Mass. -- May 24, 1996 -- Hills Stores
Company (NYSE: HDS) today released its first quarter financial
results. Hills also announced a call for redemption of its
remaining outstanding 10.25% Senior Notes due 2003.
The Company reported a net loss for its first fiscal quarter
ended May 4, 1996 of $14.7 million, compared with a net loss of $4.3
million in the first quarter last year. The net loss was $1.45 per
share in this year's quarter compared with a $0.42 loss per share in
the first quarter last year. This year's quarter included a pre-
tax, non-cash charge of $11.7 million ($6.8 million after tax, or
$0.67 per share) for the impairment of long-lived assets. Earnings
before interest, taxes, depreciation, amortization, and other non-
cash charges (EBITDA) decreased to $5.4 million in the most recent
quarter compared with $10.7 million in the same period last year.
Total sales for the current year's first quarter increased by
2.0% from the previous year to $370.2 million, while comparable
store sales decreased by 1.7% for the quarter. Gross profit margin
decreased to $99.3 million from $101.3 million and declined as a
percentage of sales to 26.8% from 27.9%. The margin rate decrease
resulted primarily from competitive pricing pressures across all
lines of business, and also from soft sales of apparel which shifted
the sales mix more towards lower margin hardlines. Selling and
administrative expenses increased as a percentage of sales to 25.4%
from 25.0%. This rate increase reflected the relatively flat sales
in existing stores and additional operating expenses from new stores
opened during mid-1995, which together more than offset the positive
effects of other expense control programs. Net interest expense in
the most recent quarter increased to $13.3 million from $9.5 million
last year primarily due to the net effect of lower interest income
and increased borrowings under the Company's revolving credit line.
Gregory K. Raven, President and Chief Executive Officer of
Hills, stated, "We knew entering this year that the first quarter
was going to be our toughest from a prior year comparison
standpoint. We could not predict, however, the significant impact
of the weather patterns in our geographic area. This had a negative
impact on the Company's sales, particularly in the spring and summer
apparel categories. In addition, certain of the Company's new
stores opened in fiscal 1995 continue to underperform initial
expectations.
"There was good news in the quarter. We successfully marketed
$195 million of new Senior Notes to refinance our existing Senior
Notes. This saved the Company a payment of $7.5 million to the old
noteholders. We also began the rebuilding of the Hills' management
team with the addition of Scott Litten as Chief Financial Officer.
However, we still have a lot of work to do to position this Company
to compete effectively in the future. Much of that work will take
place this year with the bulk of the positive impact to be achieved
in future years. I continue to be optimistic about fiscal 1996."
The Company's charge for impairment of long-lived assets
resulted from the required adoption of the new Statement of
Financial Accounting Standards No. 121: "Accounting for the
Impairment of Long-Lived Assets." This non-cash charge reduced the
current tangible and intangible book value of certain
underperforming stores to an estimate of those assets' fair market
value pursuant to the provisions of the Standard. It will also
result in reduced depreciation and amortization in future periods
related to those stores.
The Company also announced that in May it had completed the
required offer to redeem its 10.25% Senior Notes. In connection
with the offer, Senior Notes totaling $155.0 million principal
amount, or over 98% of the outstanding notes, were redeemed. As
previously announced, the Company used a portion of the proceeds
from the sale of its new Senior Notes to redeem the 10.25% Senior
Notes.
In addition, the Company announced that it has now decided to
call for mandatory redemption all remaining 10.25% Senior Notes at
the indenture-specified price of 104% of principal, plus accrued
interest. Scott Litten, Executive Vice President-Chief Financial
Officer, stated, "Given the relatively small amount of 10.25% Senior
Notes remaining, the Company is now able to clean up its capital
structure and eliminate certain restrictive covenants at a
reasonable cost by means of this mandatory redemption."
As a result, in its second fiscal quarter the Company will
recognize an after-tax extraordinary loss of $1.5 million on the
extinguishment of this debt. The amount includes the premiums paid
on the Senior Notes redeemed and the write-off of existing deferred
financing costs.
Hills Stores Company is a leading regional discount retailer
operating 164 stores in 12 Mid-Western and Mid-Atlantic states.
1996 Summary of Operations
(unaudited)
(dollars in thousands, except per share amounts)
First quarter 1996 1995
Sales $370,248 $362,862
EBITDA (A) 5,385 10,662
Operating earnings (loss) (16,674) (C) 1,476
Net loss (14,738) (C)(4,337)
Loss per share ($1.45) ($0.42)
Fully-diluted shares outstanding (B) 10,166 10,399
(A) Represents earnings before interest, taxes, depreciation,
amortization, and other non-cash items on a first-in, first-out,
inventory basis
(B) Fully-diluted average shares outstanding for the quarters ended
May 4, 1996 and April 29, 1995 do not include 1,074,883 and
1,374,082
shares of preferred stock, respectively, as their effect would be
anti-dilutive.
(C) Includes an $11.7 million pre-tax charge related to the
Company's adoption of Statement of Financial Accounting Standards
No.
121 "Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to Be Disposed Of."
HILLS STORES COMPANY AND SUBSIDIARIES
Consolidated Statements of Operations
(unaudited)
(dollars in thousands, except per share amounts)
Quarter Ended
May 4, April 29,
1996 1995
Net sales $ 370,248 $ 362,862
Cost of sales 270,985 261,552
Selling and administrative expenses 94,118 90,734
Depreciation and amortization 10,113 9,100
Impairment of long-lived assets 11,706 -
Operating earnings (loss) (16,674) 1,476
Interest expense, net 13,266 9,492
Loss before income taxes (29,940) (8,016)
Income tax benefit 15,202 3,679
Net loss $ (14,738) $ (4,337)
Net loss per share:
Primary $ (1.45) $ (0.45)
Fully-diluted $ (1.45) $ (0.42)
Shares outstanding:
Primary 10,166 9,666
Fully-diluted (a) 10,166 10,399
Earnings before interest, taxes,
depreciation, amortization and other
non-cash charges on a first-in,
first-out, inventory basis $ 5,385 $ 10,662
(a) Does not include 1,074,883 and 1,374,082 shares of preferred
stock for the quarters ended May 4, 1996 and April 29, 1995,
respectively, as their effect would be anti-dilutive.
HILLS STORES COMPANY AND SUBSIDIARIES
Consolidated Balance Sheets
Proforma
May 4, May 4, April 29,
(in thousands) 1996 1996 1995
ASSETS
Current assets:
Cash and cash equivalents $ 7,885 $ 12,665 $ 6,360
Cash restricted to redemption
of senior notes - 153,762 -
Accounts receivable, net 28,203 28,203 28,782
Inventories 410,330 410,330 400,328
Deferred tax asset 34,011 34,011 20,923
Other current assets 5,735 5,735 5,002
Total current assets 486,164 644,706 461,395
Property and equipment, net 182,096 182,096 166,741
Property under capital leases, net 109,610 109,610 121,524
Beneficial lease rights, net 7,782 7,782 8,868
Other assets, net 20,530 22,223 5,176
Deferred tax asset 8,233 8,233 10,061
Reorganization value in excess of
amounts allocable to identifiable
assets, net 105,158 105,158 142,826
$ 919,573 $1,079,808 $ 916,591
LIABILITIES AND COMMON SHAREHOLDERS' EQUITY
Current liabilities:
Senior notes subject to redemption $ - $ 154,725 $ -
Current portion of capital leases 5,732 5,732 6,121
Borrowings under revolving credit
facility 43,000 43,000 -
Accounts payable, trade 108,984 108,984 126,353
Other accounts payable and accrued
expenses 153,799 157,844 174,192
Total current liabilities 311,515 470,285 306,666
Long-term senior notes 195,000 195,000 160,000
Long-term obligations under capital
leases 117,148 117,148 123,037
Financing obligation - sale/leaseback 25,169 25,169 25,169
Other liabilities 7,536 7,536 10,098
Commitments and contingencies - - -
Preferred stock, at mandatory
redemption value 21,498 21,498 27,482
Common shareholders' equity:
Common stock 103 103 96
Additional paid-in capital 213,908 213,908 206,714
Unearned compensation (1,101) (1,101) -
Retained earnings 28,797 30,262 57,329
Total common shareholders'
equity 241,707 243,172 264,139
$ 919,573 $1,079,808 $ 916,591
NOTE: The proforma Balance Sheet reflects the assumed redemption of
that portion of the 10.25% Senior Notes still outstanding at May 4,
1996 plus redemption premiums and accrued interest.
CONTACT: Hills Stores Company
C. Scott Litten
Executive Vice President/
Chief Financial Officer
617/821-1000 ext. 1690
or
The Bromley Group
Alan Bromley
212-807-0878
ANAHEIM, Calif. -- May 24, 1996 -- The Clothestime
Inc. (NASDAQ:CTMEQ) Friday announced results for the first quarter
ended April 27, 1996.
Sales for the quarter were $43.7 million, compared with $72.3
million last year. A significant portion of the total sales
reduction was due to the lower number of stores this year as
compared with last year. Currently, there are 397 stores as
compared with 575 stores last year. Comparable store sales for the
quarter decreased by 23 percent.
Operating loss for the quarter before reorganization charges was
$4.5 million, as compared with $7.2 million for the same period last
year. Net loss for the quarter was $5.9 million, compared with a
net loss of $4.3 million for the same period last year. There was
no income tax benefit this year, compared with an income tax benefit
of $2.8 million last year.
The loss for the first quarter this year includes reorganization
charges which increased the net loss by $1.4 million. The charges
related primarily to the professional fees pertaining to the
company's Chapter 11 filing. Loss per share was $0.41, compared
with a $0.31 loss per share for the same period last year.
Clothestime Stores currently operates 397 women's apparel stores
in 20 states and Puerto Rico, offering primarily in-season,
moderately priced sportswear, dresses and accessories, emphasizing
fashion at a discount from department and specialty stores.
The Clothestime Inc.
Summary Results of Operations
(Unaudited)
(000s Omitted, Except Per-Share Amounts)
Period Ending
April 27, 1996 April 29, 1995
Net sales $ 43,667 $ 72,347
Loss before reorganization
costs and income tax benefit $ 4,461 $ 7,154
Net loss $ 5,852 $ 4,350
Loss per share $ 0.41 $ 0.31
Average shares outstanding 14,198 14,182
On Dec. 8, 1995, The Clothestime Stores Inc. and five of its
subsidiaries filed for protection under Chapter 11 of the U.S.
Bankruptcy Code.
BRAINTREE, Mass., May 24, 1996 - Bradlees, Inc. (NYSE:
BLE) today reported results for the first quarter of fiscal 1996.
Total sales for the thirteen weeks ended May 4, 1996 were $349.9
million versus total sales of $392.4 million for the first quarter
of last year. Comparable store sales declined 12.6% for the quarter.
The loss before interest, reorganization items and income taxes
for the first quarter of fiscal 1996 was $43.7 million compared with
a loss before interest, reorganization items and income taxes of
$45.1 million for the first quarter of fiscal 1995. The net loss
for the first quarter of fiscal 1996 was $53.7 million or $4.71 per
share versus a net loss of $32.4 million, after an income tax
benefit of $22.5 million, or $2.84 per share for the prior year.
During the quarter, the Company opened three new stores (Peabody
and Worcester, MA and Providence, RI) and announced that it would
close 12 underperforming locations in the second-quarter of fiscal
1996. The Company also introduced a major new marketing campaign in
February, which included the return of "Mrs. B", the popular and
widely-recognized Bradlees' television spokesperson throughout the
late 1970's and early 1980's.
Reorganization items for the first quarter included a write-down
of assets for a previously planned store location, bankruptcy
expenses (primarily professional fees) and employee severance
charges associated with the closing stores and the reorganization of
the Company's store management structure.
Commenting on today's announcement, Mark A. Cohen, Bradlees'
Chairman and Chief Executive said, "Despite lower than anticipated
sales resulting from difficulties in promptly offsetting
discontinued merchandise categories, unfavorable weather conditions
and delayed implementation of store closing sales, our gross margin
rate was well above last year and plan for the quarter. This
increase was primarily due to improvements in the assortment and
quality of our merchandise in apparel and decorative home that are a
primary focus of Bradlees' merchandising strategy."
Bradlees, Inc., which currently operates 124 discount department
stores in Maine, New Hampshire, Massachusetts, Connecticut, New
York, New Jersey, Pennsylvania and Rhode Island, emphasizes a unique
blend of fashionable, high quality apparel and home furnishings at
outstanding value to its customers. Bradlees' common stock is
listed and traded on the New York Stock Exchange under the symbol
"BLE".
BRADLEES, INC. AND SUBSIDIARIES
(Operating as Debtor-In-Possession)
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(Dollars in thousands except per share amounts)
13 Weeks Ended
May 4, April 29,
1996 1995
Total sales $349,891 $392,389
Leased department sales 12,188 12,783
Net sales 337,703 379,606
Cost of goods sold 235,189 280,099
Gross margin 102,514 99,507
Leased department and
other operating income 2,757 3,355
Total 105,271 102,862
Selling, store operating, administrative
and distribution expenses 137,947 134,689
Depreciation and amortization 11,017 13,296
Loss before interest, reorganization
items, and income taxes (43,693) (45,123)
Interest and debt expense 2,515 9,793
Reorganization items 7,538 ---
Loss before income taxes (53,746) (54,916)
Income tax benefit --- 22,517
Net Loss ($53,746) ($32,399)
Net loss per share: ($4.71) ($2.84)
BRADLEES, INC. AND SUBSIDIARIES
(Operating as Debtor-In-Possession)
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(Dollars in thousands)
ASSETS 5/4/96 2/3/96 4/29/95
Current assets:
Unrestricted cash and
cash equivalents $4,947 $63,012 $3,200
Restricted cash and
cash equivalents 7,194 1,194 ---
Total cash and cash equivalents 12,141 64,206 3,200
Accounts receivable 10,055 10,536 22,595
Refundable income taxes 214 24,576 ---
Inventories 300,414 282,270 357,266
Prepaid expenses 9,778 10,008 4,571
Deferred income taxes --- --- 15,736
Assets held for sale 8,954 8,954 ---
Total current assets 341,556 400,550 403,368
Property excluding capital
leases, net 158,444 170,247 217,670
Property under capital
leases, net 35,277 37,249 63,541
Total property, plant
and equipment, net 193,721 207,496 281,211
Lease interests at fair value and
lease acquisition costs, net 184,213 186,626 246,340
Other, net 4,009 3,990 7,907
Total other assets 193,336 190,616 254,247
Total Assets $728,613 $798,662 $938,826
BRADLEES, INC. AND SUBSIDIARIES
(Operating as Debtor-In-Possession)
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(Dollars in thousands)
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIENCY)
5/4/96 2/3/96 4/29/95
Current liabilities:
Accounts payable $137,268 $148,870 $240,633
Accrued expenses 60,294 63,735 56,536
Short-term debt --- --- 93,000
Current portion of long-term debt 2,524 2,602 6,096
Total current liabilities 200,086 215,207 396,265
Long-term liabilities:
Other notes --- --- 5,150
Subordinated debt --- --- 225,000
Obligations under capital leases 52,816 53,396 67,952
Deferred income taxes 8,581 8,581 85,552
Other long-term liabilities 26,360 26,723 29,191
Total long-term liabilities 87,757 88,700 412,845
Liabilities subject to settlement
under the reorganization case 539,422 539,765 ---
Stockholders' equity (deficiency):
Common stock -- 11,413,554 shares
outstanding (11,416,656 and
11,410,048 shares outstanding at
2/3/96 and 4/29/95, respectively)
Par value 115 115 115
Additional paid-in capital 137,951 137,951 138,346
Unearned compensation (551) (793) (1,547)
Accumulated deficit (235,512) (181,766) (6,751)
Treasury stock, at cost (655) (517) (447)
Total stockholders' equity
(deficiency) (98,652) (45,010) 129,716
Total Liabilities and
Stockholders' Equity (deficiency) $728,613 $798,662 $938,826
SHERMAN OAKS, Calif., May 24, 1996 - House of Fabrics,
Inc. (NYSE: HF) announced that the Bankruptcy Court late yesterday
approved the company's disclosure statement, which permits the
company to begin soliciting approval from creditors and equity
holders on the company's plan of reorganization. Solicitation of
creditors and shareholders will begin May 29 and conclude June 28.
The hearing to confirm the plan of reorganization could occur as
early as July 10.
"We are pleased that the Court has approved the disclosure
statement, and that the Company will begin the final stages of its
financial reorganization," said Gary L. Larkins, president and chief
executive officer of House of Fabrics. "We have made great progress
during the Chapter 11 period, so that House of Fabrics today is a
smaller, but considerably stronger company with debt at a level that
the company will be able to support.
"We have improved internal controls and continue to roll out a
new point-of-sale (POS) system in our stores to improve sales
reporting and inventory tracking. We are also installing a new
integrated management information system that will improve sales,
profit margins and customer service, while it also permits
additional overhead reductions. And we have installed manager work
stations chain wide, so that every store can communicate directly
with the corporate office on a daily basis."
Mr. Larkins noted the major results of the reorganization, including:
The disclosure statement and plan of reorganization describe the
company's operating and financial history and indicate the manner in
which creditors' claims will be satisfied. The disclosure statement
approved today calls for satisfaction of the bank group's secured
claims through payment of $75.5 million in cash plus 5 percent of the
common stock in the reorganized company.
Approved general unsecured creditors, with claims that are
expected to total between $100 million and $120 million, will
receive 93 percent of the common stock in the reorganized company.
Equity holders will receive two percent of the stock in the
reorganized company, along with warrants to purchase up to an
additional 15 percent of the common shares.
Lawrence A. Diamant, of the law firm of Robinson, Diamant, Brill
& Klausner, counsel for the official committee representing the
unsecured creditors, indicated that in his view the plan provides
the most favorable recovery of any available plan. Mr. Diamant
expressed his confidence that the committee will unanimously support
the plan and encourage the holders of all general unsecured claims
to vote in favor of acceptance.
Creditors and equity holders are entitled to vote, and they will
receive copies of the disclosure statement and plan of
reorganization and ballots by mail. To be considered valid, ballots
must be returned no later than June 28.
House of Fabrics operates 269 company-owned House of Fabrics,
Sofro Fabrics, Fabricland and Fabric King retail fabric and craft
stores in 34 states and employs approximately 7,000 people. The
company and its subsidiaries filed to restructure under Chapter 11
on November 2, 1994.
CONTACT: Sandra Sternberg or Ann Julsen of Sitrick and Company,
310-788-2850