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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 [FEE REQUIRED]
For the fiscal year ended February 28, 1995
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from to
Commission File No.: 1-5767
CIRCUIT CITY STORES, INC.
(Exact name of Registrant as specified in its charter)
VIRGINIA 54-0493875
(State or other jurisdiction of (I.R.S. Employer
Incorporation or organization) Identification No.)
9950 Mayland Drive
Richmond, VA 23233
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (804) 527-4000
Securities registered pursuant to Section 12(b) of the Act:
Name of Each Exchange
Title of Each Class on Which Registered
Common Stock, Par Value $.50 New York Stock Exchange
Rights to Purchase Preferred Stock,
Series E, Par Value $20.00 New York Stock Exchange
Securities registered pursuant to Section 12(g) of the Act: None
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 by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be
contained, to the best of the Registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-
K or any amendment to this Form 10-K [ ].
On May 5, 1995, the Company had 96,607,304 common shares outstanding.
The aggregate market value of the common shares held by non-affiliates
(without admitting that any person whose shares are not included in
determining such value is an affiliate) was $2,519,796,284 based upon the
closing price of these shares as reported by the New York Stock Exchange on
May 5, 1995.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the following documents are incorporated by reference in
Parts I, II, III, and IV of this Form 10-K Report: (1) Pages 17 through 31 of
the Company's Annual Report to Shareholders for the fiscal year ended
February 28, 1995 (Parts I, II and IV) and (2) "Election of Directors,"
"Beneficial Ownership of Securities," "Executive Compensation, "Employment
Agreements and Change-in-Control Arrangements," "Compensation of Directors"
and "Section 16(a) Compliance" in the May 12, 1995 Proxy Statement, furnished
to shareholders of the Company in connection with the 1995 Annual Meeting of
such shareholders (Part III).
TABLE OF CONTENTS
Item Page
PART I
1. Business 3
2. Properties 6
3. Legal Proceedings 8
4. Submission of Matters to a Vote of Security Holders 8
PART II
5. Market for the Company's Common Equity and Related Stockholder
Matters 9
6. Selected Financial Data 9
7. Management's Discussion and Analysis of Results of Operations and
Financial Condition 9
8. Financial Statements and Supplementary Data 10
9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure 10
PART III
10. Directors and Executive Officers of the Company 10
11. Executive Compensation 10
12. Security Ownership of Certain Beneficial Owners and Management 10
13. Certain Relationships and Related Transactions 10
PART IV
14. Exhibits, Financial Statement Schedule, and Reports on Form 8-K 11
PART I
Item 1. Business.
Circuit City Stores, Inc. (the Company) was incorporated under the laws of
Virginia in 1949. Its corporate headquarters is located at 9950 Mayland
Drive, Richmond, Va. The Company's retail operations consist of Circuit City
Superstores, Circuit City electronics-only stores and mall-based Circuit City
Express stores. Effective May 1, 1994, all Western region Superstore
locations were transferred to and began operating as part of a wholly owned
subsidiary called Circuit City Stores West Coast, Inc. The Company has a
wholly owned credit card bank subsidiary, First North American National Bank,
that extends consumer credit. In addition, the Company is testing CarMax, a
retail Superstore format selling late-model used cars.
General. The Company is the nation's largest retailer of brand-name
consumer electronics and major appliances and a leading retailer of personal
computers and music software. It sells video equipment, including
televisions, digital satellite systems, video cassette recorders and
camcorders; audio equipment, including home stereo systems, compact disc
players, tape recorders and tape players; mobile electronics, including car
stereo systems and security systems; home office products, including personal
computers, peripheral equipment and facsimile machines; other consumer
electronics products, including telephones and portable audio and video
products; entertainment software; and major appliances, including washers,
dryers, refrigerators, microwave ovens and ranges. Music software, including
compact discs and audio tapes, was introduced on a limited basis in fiscal
1993 and was available in almost two-thirds of the Superstores at April 30,
1995.
Each of the Company's store locations follows detailed operating procedures
and merchandising programs. Included are procedures for inventory
maintenance, advertising, customer relations, store administration, display
of merchandise, security and demonstration and sale of products. Each store
carries a standard line of products selected at the corporate level and
supplied directly to the stores by the Company's regional warehouse
distribution facilities.
Expansion. The Company's goal is to secure the leading market share in
each market it serves. The benefits of this approach include maximizing
competitive position and sales. This approach also maximizes net profit
margins since costs, especially advertising, are reduced as a percentage of
sales.
Merchandising. Because the Company believes that local markets have
individual characteristics which vary greatly by the advertising,
merchandising and pricing strategies of competitors, it has organized its
marketing function to focus on markets with similar competitive conditions.
The Company's operating regions benefit from a centralized buying
organization. The central buying staff reduces costs by purchasing in large
volumes, structures a sound basic merchandising program and is supported by
advanced management information and distribution systems.
The Company's merchandising strategy emphasizes a broad selection of
products, including introductory products, and a wide range of prices.
Merchandise mix and displays are controlled centrally in an effort to ensure
a high level of consistency from store to store. Merchandise pricing and
selling strategies vary by market to reflect competitive conditions.
Although suggested retail prices are established by the Company's central
merchandising departments, each store manager is responsible for shopping the
local competition on a regular basis and has the authority to adjust retail
prices to meet market conditions. As part of its competitive strategy, the
Company advertises low prices and provides each customer with a low-price
guarantee. The Company will beat any legitimate price from a local
competitor stocking the same new item in a factory-sealed box. If a customer
finds a lower price, including the Company's own sale price, within 30 days,
the Company will refund 110 percent of the difference to the customer.
Suppliers. During fiscal 1995, the Company's 10 largest suppliers
accounted for approximately 55 percent of merchandise purchased by the
Company. The Company's major suppliers include Sony, Packard Bell, Thomson,
JVC, Whirlpool, Panasonic, Zenith, Hitachi, General Electric and Kenwood.
Brand-name advertised products are sold by all of the Company's retail
locations. The Company has no significant long-term contracts for the
purchase of merchandise.
In the past, the Company has not experienced any significant difficulty
obtaining satisfactory sources of supply and believes that adequate sources
of supply exist for the types of merchandise sold in its stores.
Advertising. The Company relies on considerable amounts of advertising
and promotion to stimulate Superstore and electronics-only store sales.
Expenditures for these items were 4.7 percent of sales in fiscal 1995 (5.1
percent and 5.3 percent in fiscal 1994 and 1993, respectively). The
improvement in advertising as a percent to sales was primarily due to
comparable store sales growth. Also, as the Company adds new stores in
existing markets, the increased sales volume improves the efficiency of
existing advertising expenditures. These same efficiencies will be evidenced
in the Company's expansion into smaller trade areas, as existing television
advertising in neighboring markets already reaches many of these areas. The
Company primarily uses print advertising, including multi-page vehicles and
run-of-press newspaper ads, for Superstore and electronics-only store
advertising. The Company also emphasizes the use of multi-page vehicles to
allow a more extensive presentation of the broad selection of products and
price ranges it carries. These multi-page vehicles are generally distributed
in newspapers but are, in some cases, mailed directly to residences outside
the newspapers' area of circulation. Print advertising is supplemented in
varying degrees in local markets by television and radio commercials.
Competition. The brand-name consumer electronics and major appliance
business engaged in by the Company is highly competitive. The Company's
competitors include other full-service retailers, self-service retailers,
specialty retailers with differing product selections and services, general
merchandise retailers and local independent operators. Over the past three
years, the Company's competition has shifted to include more self-service
retailers that often offer a more limited product selection but at highly
competitive prices.
The Company uses pricing, selection and service to differentiate itself
from the competition. As part of its competitive strategy, the Company
strives to maintain highly competitive prices and offers every customer the
low-price guarantee previously described. The Company's Superstores offer a
broad product selection that includes 3,200 to 4,000 name-brand items
(excluding music software), depending on the selling square footage of the
Superstore. Professionally trained sales counselors, convenient credit
options, factory-authorized product repair, home delivery, installation
centers for automotive electronics, a toll-free product support line and a
30-day return policy reflect the Company's strong commitment to customer
service.
Customer Satisfaction. Extensive market research is conducted to measure
the Company's customer service record and to refine the Company's consumer
offer. More than 300,000 random telephone surveys are conducted each year to
track satisfaction among the Company's existing customer base. In fiscal
1995, the Company added random market share surveys of almost 10,000
consumers purchasing from Circuit City or competitors. These surveys,
conducted in 15 markets, establish a benchmark for comparing the Company's
performance to that of other retailers. Finally, to provide a detailed
understanding of consumer preferences, the Company conducted focus groups
with more than 1,000 consumers in four highly competitive markets during
fiscal 1995. Statistically valid data collected in these studies clearly
indicated that consumers want a high-quality shopping experience and that
Circuit City has successfully met that demand.
Training. The Company staffs its stores with commissioned sales
counselors, support personnel (cashiers and stockmen), a store manager, one
or more sales managers and, in larger stores, an operations manager. In
existing markets, all new sales counselors complete approximately two weeks
of training, including at least one week of classroom-based sessions.
Training in new markets lasts up to five weeks and adds coverage of store
merchandising and operations. To successfully complete sales training, all
sales counselors must pass a test demonstrating a high level of product
knowledge.
Initial sales counselor training is generally conducted at one of seven
regional training facilities. Each store includes a designated area for
ongoing training that utilizes manuals, computer-based programs and videos
developed by the Company's professional trainers. In fiscal 1995, the
Company completed a 14,000-square-foot, state-of-the-art video facility
designed for the production of high-quality audio, video and computer-based
training materials.
Management development programs for store, sales and operations managers
include in-store and classroom training. Sessions focus on human resource
management, sales management and critical operating procedures. In fiscal
1995, these development programs enabled the Company to assign managers with
prior Circuit City management experience to the majority of new-market store
openings.
Consumer Credit. Because consumer electronics, personal computers and
major appliances represent relatively large purchases for the average
consumer, the Company's business is affected by consumer credit availability,
which varies with the state of the economy and the location of a particular
store. In fiscal 1995, approximately 19 percent of the Company's total sales
were made through its private-label credit card and 41 percent through third-
party credit sources.
The Company established a subsidiary, First North American National Bank
(FNANB), in fiscal 1991 to handle its private-label credit card business.
The credit card bank subsidiary is located in Marietta, Ga.
FNANB's credit extension and collection operations are fully automated with
state-of-the-art technology. This technology aids FNANB's aggressive
collection philosophy, which is comprised of early and frequent contact with
delinquent customers.
In addition to increased credit availability, this credit program provides
the Company with additional marketing opportunities, including direct mail
campaigns to credit card customers and special financing programs for
promotions. The new credit program also enhances the Company's customer
service philosophy. Interfacing the credit card bank subsidiary with the
Company's point-of-sale (POS) system has produced a rapid customer credit
approval process. A customer's application can be electronically scored, and
qualified customers receive approval in under five minutes.
FNANB sells receivables generated by the credit card programs to non-
affiliated entities under asset securitization programs.
In fiscal 1995, the Company partnered with American General Finance, Inc.
(AGF) to provide automated credit evaluation for customers who need another
installment credit option.
Systems. The Company's in-store POS system maintains an on-line record of
all transactions and allows performance to be tracked by region, store and
individual sales counselor. The information gathered by the system supports
automatic replenishment of in-store inventory from the regional distribution
centers and is incorporated into the Company's product buying decisions. The
POS system is interfaced with the credit approval systems of both FNANB and
AGF.
The Company's proprietary Customer Service Information System maintains an
on-line history of customer purchases and enables the Company to better assist
individuals with future purchases by ensuring that new products can be
integrated with existing products in the home. It also facilitates product
returns and product repair. In addition, this system supports Answer City(R),
a toll-free product support line. Answer City(R) provides the Company's
customers with access to skilled product specialists. From their homes,
customers can receive immediate answers to basic questions regarding product
usage and installation. This service is only available to Circuit City
customers.
Distribution. At April 30, 1995, the Company operated eight automated
electronics distribution centers. These centers are designed to serve stores
within a 500-mile range. They utilize conveyor systems with laser barcode
scanners to reduce labor requirements, prevent inventory damage and maintain
inventory control. The Company also operates smaller distribution centers
handling primarily appliances and larger electronics products. The Company
believes that the use of the distribution centers enables it to efficiently
distribute a broad selection of merchandise to its stores, reduce inventory
requirements at individual stores, benefit from volume purchasing and
maintain accounting control. In addition, the Company operates a centralized
distribution center for music software. Virtually all of the Company's
Superstore and electronics-only store merchandise is distributed through its
distribution centers.
Service. The Company offers service and repair for nearly all the products
it sells. Customers are also able to purchase extended warranty plans on
most of the merchandise the Company sells.
At April 30, 1995, the Company had 27 regional, factory-authorized repair
facilities. To meet customer needs, merchandise needing service or repair
usually is moved by truck from the stores to the Company's nearest regional
service facility and is returned to the customer at the store after repair.
The Company also has in-home technicians who service large items not
conveniently carried to a store.
Extended warranty plans extend coverage beyond the normal manufacturer's
warranty period, usually with terms of coverage (including the manufacturer's
warranty period) between 12 and 60 months. In fiscal 1994, the Company
introduced two third-party extended warranty programs. The first of these
programs provides in-home service, rather than the in-shop service commonly
available in the marketplace, for most personal computer products, including
peripheral equipment. This program is provided by General Electric Company,
which has a large-scale operation in place to honor these commitments, and is
available in most major markets.
The second third-party program covers consumer electronics and major
appliances and offers extended service programs backed by insurance from
Virginia Surety Company, Inc., a subsidiary of AON Corporation. Virginia
Surety carries an A.M. Best Company rating of superior (A+). This program
was offered in approximately 65 percent of the Company's Superstores at April
30, 1995.
The Company sells its own extended warranty contracts in markets where the
third-party programs are not available.
Seasonality. Like other retail businesses, the Company's sales are greater
in the fourth quarter of the fiscal year than in other periods of the fiscal
year because of holiday buying patterns. A corresponding pre-seasonal
inventory build-up is associated with this sales volume. This increased
sales volume results in a lower ratio of fixed costs to sales and produces a
higher ratio of operating income to sales in the fourth fiscal quarter. The
Company's sales for the fourth fiscal quarter (which includes the Christmas
season) were $1,910,235,000 in fiscal 1995, $1,406,736,000 in fiscal 1994,
and $1,098,252,000 in fiscal 1993 and represented approximately 34 percent of
sales in all three fiscal years.
Employees. On April 30, 1995, the Company had 18,519 hourly and salaried
employees and 12,479 sales employees working on a commission basis.
Additional personnel are employed during peak selling seasons. Management of
the Company considers its relationship with its employees to be good. None
of the Company's employees is subject to a collective bargaining agreement.
Item 2. Properties.
At April 30, 1995, the Company's retail operations were conducted in 356
locations. The Company operates four Circuit City Superstore formats with
square footage and merchandise assortments tailored to the population and
volume expectations for specific trade areas. The "D" format was developed
in fiscal 1995 to serve the most populous trade areas. Selling space in the
"D" format averages approximately 24,000 square feet with total square
footage averaging approximately 42,000. The "D" stores offer the largest
merchandise assortment of all the formats. The "C" format is designed to
serve moderately smaller trade areas and provides a highly competitive
merchandise assortment. New "C" stores typically have about 17,000 square
feet of selling space; total square footage for all "C" stores averages
approximately 34,000. The "B" format is often located in smaller markets or
in trade areas that are on the fringes of larger metropolitan markets.
Selling space in these stores averages approximately 10,000 square feet with
an average total square footage of approximately 24,000. The "B" stores
offer a broad merchandise assortment that maximizes returns in these less
populated areas. The "A" format serves the least populated trade areas.
Selling space in the existing stores averages approximately 8,000 square
feet, and total square footage averages approximately 16,000. The "A" stores
feature a layout, staffing levels and merchandise assortment that creates
high productivity in the smallest markets.
The five electronics-only stores offer the Company's full line of consumer
electronics and a limited selection of major appliances. Selling space in
these stores averages approximately 4,000 square feet with an average total
square footage of approximately 8,000. The Company's 33 mall-based Circuit
City Express stores are located in regional malls, average approximately
3,000 square feet in size and sell small, gift-oriented items.
The following table summarizes the Company's stores as of April 30, 1995:
Superstores Electronics- Mall
D C B A Only Stores Total
Alabama - 5 - - - - 5
Arizona 1 6 1 - - 2 10
Arkansas - 2 - - - - 2
California 1 58 9 - - 2 70
Delaware - 1 - - - 1 2
District of Columbia - - - - - 1 1
Florida - 26 6 - - 1 33
Georgia 1 9 3 - - - 13
Illinois 4 18 3 - - 2 27
Indiana - 1 1 - - - 2
Kansas 1 - - - - - 1
Kentucky - 5 - - - - 5
Louisiana - 5 - - - - 5
Massachusetts 1 7 3 - - 5 16
Maryland - 11 - - 2 4 17
Minnesota - 7 - - - 3 10
Missouri 1 8 - - - 1 10
Nevada - 3 - - - - 3
New Hampshire - 4 - - - 1 5
New Jersey - 4 - - - - 4
New York - - - - - 3 3
North Carolina - 9 2 - - - 11
Ohio 3 3 - - - 1 7
Oklahoma - 2 1 - - - 3
Oregon 1 3 - - - - 4
Pennsylvania - 7 - - - 1 8
Rhode Island - 1 - - - - 1
South Carolina 1 4 - - - - 5
Tennessee - 8 - - 1 - 9
Texas - 28 1 2 - 1 32
Utah 4 - - - - - 4
Virginia - 11 5 3 - 4 23
Washington 1 2 - - - - 3
West Virginia - - - - 2 - 2
20 258 35 5 5 33 356
Of the stores open at April 30, 1995, the Company owns 17 stores (10 of
which have land leases) and leases the remaining 339 stores. Three of the
owned stores are financed by Industrial Development Revenue Bonds that are
collateralized by the applicable land, building, and equipment.
For information with respect to obligations for leases, see note 7 of the
Notes to Consolidated Financial Statements on pages 29 and 30 of the
Company's 1995 Annual Report to Stockholders, which is incorporated herein by
reference.
The Company owns the land but leases the building in which its corporate
headquarters is located and leases another building on that site for
additional office space. In addition, the Company owns one location used for
additional office space and one location leased to others.
The Company owns a 388,000-square-foot consumer electronics/appliance
distribution center in Doswell, Va., a 387,000 square-foot consumer
electronics/appliance distribution center in Atlanta, Ga., and a 173,000-
square-foot electronics/appliance distribution center in Chehalis, Wash. The
Virginia and Georgia distribution centers have been financed with Industrial
Development Revenue Bonds.
The Company leases space for all warehouse, service and office facilities
except for the aforementioned properties.
Item 3. Legal Proceedings.
Because of the nature of the Company's businesses, the Company is a party
to various legal proceedings that are incidental to its businesses.
Management believes, after consultation with legal counsel, that the outcome
of these proceedings will not have a material adverse effect upon the
financial condition or results of operations of the Company.
Item 4. Submission of Matters to a Vote of Security Holders.
No matter was submitted to a vote of security holders during the fourth
quarter of the fiscal year ended February 28, 1995.
Executive Officers of the Company.
The following table identifies the present executive officers of the
Company. The Company is not aware of any family relationship between any
executive officers of the Company or any executive officer and any director
of the Company. All executive officers are generally elected annually and
serve for one year or until their successors are elected and qualify. The
next general election of officers will occur in June 1995.
Name Age Office
Richard L. Sharp 48 Chairman of the Board,
President and Chief
Executive Officer
Richard S. Birnbaum 42 Executive Vice President
- Operations
W. Stephen Cannon 43 Senior Vice President and
General Counsel
Michael T. Chalifoux 48 Senior Vice President,
Chief Financial Officer and
Corporate Secretary
John A. Fitzsimmons 52 Senior Vice President
- Administration
W. Austin Ligon 44 Senior Vice President - Corporate
Planning and Automotive
W. Alan McCollough 45 Senior Vice President
- Merchandising
William E. Zierden 56 Senior Vice President
- Human Resources
Raymond M. Albers 53 Vice President and
Chief Information Officer
Mr. Sharp is a director and a member of the Company's executive committee.
He joined the Company in 1982 as executive vice president and was elected
president in 1984, chief executive officer in 1986, and chairman of the board
in 1994.
Mr. Birnbaum joined the Company in 1972. He was elected vice president in
1985, Central Division president in 1986, senior vice president - marketing
in 1991, and executive vice president - operations in 1994.
Mr. Cannon joined the Company in April 1994 as senior vice president and
general counsel. Prior to joining the Company, he had been since 1986 a
partner in Wunder, Diefenderfer, Ryan, Cannon & Thelen, a Washington, D.C.,
law firm.
Mr. Chalifoux is a director and a member of the Company's executive
committee. He joined the Company in 1983 as corporate controller and was
elected vice president and chief financial officer in 1988. He was elected
senior vice president in 1991 and became corporate secretary in 1993.
Mr. Fitzsimmons joined the Company in 1987 as senior vice president -
administration.
Mr. Ligon joined the Company in 1990 as vice president - corporate
planning and communications. He was elected senior vice president - corporate
planning and communications in 1991. In 1994, Mr. Ligon assumed responsibility
for the Company's automotive operations. Prior to joining the Company, he
served in various capacities with Marriott Corporation.
Mr. McCollough joined the Company in 1987 as general manager of corporate
operations. He was elected assistant vice president in 1989, vice president
and Central Division president in 1991, and senior vice president -
merchandising in 1994.
Mr. Zierden joined the Company in 1984 as vice president - human
resources. He was elected senior vice president - human resources in 1989.
Mr. Albers joined the Company in 1989 as vice president and chief
information officer.
Part II
With the exception of the information incorporated by reference from the
1995 Annual Report to Stockholders in Item 2 of Part I and Items 5, 6, 7, and
8 of Part II and Item 14 of Part IV of this Form 10-K, the Company's 1995
Annual Report to Stockholders is not to be deemed filed as a part of this
Report.
Item 5. Market for the Company's Common Equity and Related Stockholder
Matters.
Incorporated herein by reference is the information appearing under the
heading "Common Stock" on page 21 of the Company's 1995 Annual Report to
Stockholders.
As of May 5, 1995, there were 8,009 shareholders of record of the Company's
common stock.
Item 6. Selected Financial Data.
Incorporated herein by reference is the information appearing under the
heading "Reported Historical Information" on page 17 of the Company's 1995
Annual Report to Stockholders.
The Company adopted FASB Technical Bulletin No. 90-1, "Accounting for
Separately Priced Extended Warranty and Product Maintenance Contracts," as of
March 1, 1990. The cumulative effect of adoption was a reduction in earnings
of $53,500,000, net of tax benefit, ($0.58 per share) in fiscal 1991.
Item 7. Management's Discussion and Analysis of Results of Operations and
Financial Condition.
Incorporated herein by reference is the information appearing under the
heading "Management's Discussion and Analysis of Results of Operations and
Financial Condition" on pages 17 through 21 of the Company's 1995 Annual
Report to Stockholders, except for the information appearing on page 21 of
such Annual Report under the heading "Common Stock."
Item 8. Financial Statements and Supplementary Data.
Incorporated herein by reference is the information appearing under the
headings "Consolidated Statements of Earnings," "Consolidated Balance
Sheets," "Consolidated Statements of Cash Flows," "Consolidated Statements of
Stockholders' Equity," "Notes to Consolidated Financial Statements," and
"Independent Auditors' Report," on pages 22 through 31 of the Company's 1995
Annual Report to Stockholders. Incorporated herein by reference is the
information appearing under the heading "Note 10. Quarterly Financial Data
(Unaudited)" on page 30 of the Company's 1995 Annual Report to Stockholders.
Item 9. Changes in and Disagreements with Accountants on Accounting and
Financial Disclosure.
None.
Part III
With the exception of the information incorporated by reference from the
Company's Proxy Statement in Items 10, 11, and 12 of Part III of this Form
10-K, the Company's Proxy Statement dated May 12, 1995, is not to be deemed
filed as a part of this Report.
Item 10. Directors and Executive Officers of the Company.
The information concerning the Company's directors required by this Item
is incorporated by reference to the section entitled "Election of Directors"
appearing at pages 1 through 3 of the Company's Proxy Statement dated May 12,
1995.
The information concerning the Company's executive officers required by
this Item is incorporated by reference to the section in Part I hereof
entitled "Executive Officers of the Company" appearing at page 8.
The information concerning compliance with section 16(a) of the Securities
Exchange Act of 1934 required by this Item is incorporated by reference to
the section entitled "Section 16(a) Compliance" appearing at pages 12 and 13
of the Company's Proxy Statement dated May 12, 1995.
Item 11. Executive Compensation.
The information required by this Item is incorporated by reference to the
sections entitled "Executive Compensation," "Employment Agreements and
Change-In-Control Arrangements," and "Compensation of Directors," appearing
at pages 6 through 8 and pages 11 and 12 of the Company's Proxy Statement
dated May 12, 1995.
Item 12. Security Ownership of Certain Beneficial Owners and Management.
The information required by this Item is incorporated by reference to the
section entitled "Beneficial Ownership of Securities" appearing at pages 4
and 5 of the Company's Proxy Statement dated May 12, 1995.
Item 13. Certain Relationships and Related Transactions.
None.
Part IV
Item 14. Exhibits, Financial Statement Schedule and Reports on Form 8-K.
(a) The following documents are filed as part of this Report:
1. Financial Statements. The following Consolidated Financial
Statements of Circuit City Stores, Inc. and subsidiaries and the
related Independent Auditors' Report are incorporated by
reference to pages 22 through 31 of the Company's 1995 Annual
Report to Shareholders:
Consolidated Statements of Earnings for the fiscal years ended
February 28, 1995, 1994 and 1993.
Consolidated Balance Sheets at February 28, 1995 and 1994.
Consolidated Statements of Cash Flows for the fiscal years ended
February 28, 1995, 1994 and 1993.
Consolidated Statements of Stockholders' Equity for the fiscal
years ended February 28, 1995, 1994 and 1993.
Notes to Consolidated Financial Statements.
Independent Auditors' Report.
2. Financial Statement Schedule. The following financial statement
schedule of Circuit City Stores, Inc. for the fiscal years ended
February 28, 1995, 1994 and 1993 is filed as part of this Report
and should be read in conjunction with the Consolidated
Financial Statements of Circuit City Stores, Inc.:
II Valuation and Qualifying Accounts and
Reserves S-1
Independent Auditors' Report S-2
Schedules not listed above have been omitted because they are
not applicable or are not required or the information required
to be set forth therein is included in the Consolidated
Financial Statements or Notes thereto.
3. Exhibits. The Exhibits listed on the accompanying Index to
Exhibits immediately following the financial statement schedules
are filed as part of, or incorporated by reference into, this
Report.
(b) Reports on Form 8-K.
The Company did not file any reports on Form 8-K during the last
fiscal quarter covered by this Report.
SIGNATURES
Pursuant to the requirements of Section 13 or 15 (d) 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.
CIRCUIT CITY STORES, INC.
(Registrant)
By s/Richard L. Sharp
Richard L. Sharp
Chairman of the Board,
President and
Chief Executive Officer
By s/Michael T. Chalifoux
Michael T. Chalifoux
Senior Vice President,
Chief Financial Officer and
Corporate Secretary
By s/Keith D. Browning
Keith D. Browning
Vice President,
Corporate Controller and
Chief Accounting Officer
May 26, 1995
Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed by the following persons on behalf of the Registrant
and in the capacities and on the dates indicated:
Signature Title Date
Alan L. Wurtzel* Director May 26, 1995
Alan L. Wurtzel
Michael T. Chalifoux* Director May 26, 1995
Michael T. Chalifoux
Richard N. Cooper* Director May 26, 1995
Richard N. Cooper
Douglas D. Drysdale* Director May 26, 1995
Douglas D. Drysdale
Barbara S. Feigin* Director May 26, 1995
Barbara S. Feigin
Theordore D. Nierenberg* Director May 26, 1995
Theordore D. Nierenberg
Walter J. Salmon* Director May 26, 1995
Walter J. Salmon
Mikael Salovaara* Director May 26, 1995
Mikael Salovaara
s/Richard L. Sharp Director May 26, 1995
Richard L. Sharp
Edward Villanueva* Director May 26, 1995
Edward Villanueva
*By: s/Richard L. Sharp
Richard L. Sharp,
Attorney-In-Fact
The original powers of attorney authorizing Richard L. Sharp and Michael T.
Chalifoux, or either of them, to sign this annual report on behalf of certain
directors and officers of the Company are included as exhibit 24.
Circuit City Stores, Inc.
Annual Report on Form 10-K
INDEX TO EXHIBITS
(3) Articles of Incorporation and Bylaws
(a) Amended and Restated Articles of Incorporation of the
Company, effective January 26, 1990, filed as Exhibit
3(a) to the Company's Annual Report on Form 10-K for the
fiscal year ended February 28, 1993, (File No. 1-5767)
are expressly incorporated herein by this reference.
(b) Articles of Amendment to the Amended and Restated
Articles of Incorporation of the Company effective
February 26, 1993, filed as Exhibit 3(b) to the Company's
Annual Report on Form 10-K for the fiscal year ended
February 28, 1993, (File No. 1-5767) are expressly
incorporated herein by this reference.
(c) Bylaws of the Company, as amended and restated April 12,
1995, are filed herewith.
(4) Instruments Defining the Rights of Security Holders, Including
Indentures
(a) Rights Agreement dated April 29, 1988, between the
Company and Crestar Bank, as Rights Agent, filed as
Exhibit (2) to the Company's Form 8-A Registration
Statement (File No. 1-5767) filed on May 23, 1988, is
expressly incorporated herein by this reference.
(b) $100,000,000 Credit Agreement dated June 30, 1992,
between the Company; Crestar Bank; NationsBank of
Virginia, N.A.; Bank of America; N.T. & S.A.; and
Signet Bank/Virginia. Pursuant to Item 601(b)(4)(iii)
of Regulation S-K, in lieu of filing a copy of such
agreement, Registrant agrees to furnish a copy of such
agreement to the Commission upon request.
(c) First Amendment to Credit Agreement dated September 14,
1994, to the $100,000,000 Credit Agreement dated June
30, 1992, between the Company; Crestar Bank;
NationsBank of Virginia, N.A.; Bank of America, N.T. &
S.A.; and Signet Bank/Virginia. Pursuant to Item
601(b)(4)(iii) of Regulation S-K, in lieu of filing a
copy of such agreement, Registrant agrees to furnish a
copy of such agreement to the Commission upon request.
(d) $100,000,000 term loan agreement dated July 28, 1994,
between the Company and the Long-Term Credit Bank of
Japan, Limited, as agent. Pursuant to Item
601(b)(4)(iii) of Regulation S-K, in lieu of filing a
copy of such agreement, Registrant agrees to furnish a
copy of such agreement to the Commission upon request.
(10) Material Contracts*
(a) Company's 1988 Stock Incentive Plan, filed as Exhibit
10(c) to the Company's Annual Report on Form 10-K for
the fiscal year ended February 28, 1993, (File No. 1-
5767) is expressly incorporated herein by this
reference.
(b) Amendments to the Company's 1988 Stock Incentive Plan
filed as Exhibit 10(k) to the Company's Annual Report
on Form 10-K for the fiscal year ended February 29,
1990, (File No. 1-5767) is expressly incorporated
herein by this reference.
(c) Amendment to the Company's 1988 Stock Incentive Plan
filed as Exhibit 4(h) to the Company's Registration
Statement on Form S-8 (Registration No. 33-50144) filed
on July 28, 1992, is expressly incorporated herein by
this reference.
(d) Company's Amended and Restated 1989 Non-Employee
Directors' Stock Option Plan, filed as Exhibit A to the
Company's Definitive Proxy Statement dated May 12,
1995, for the Annual Meeting of Stockholders to be held
on June 13, 1995, is expressly incorporated herein by
this reference.
(e) Company's 1994 Stock Incentive Plan filed as Exhibit 99
to the Company's Registration Statement on Form S-8
(Registration No. 033-56697) filed on December 1, 1994,
is expressly incorporated herein by this reference.
(f) Amendment adopted February 10, 1995, to the Company's 1994
Stock Incentive Plan is filed herewith.
(g) Employment agreement dated June 21, 1983, between the
Company and Alan L. Wurtzel, filed as Exhibit 10(w) to
the Company's Registration Statement on Form S-2
(Registration No. 2-83555), is expressly incorporated
herein by this reference.
(h) Amendment dated September 8, 1983, to employment
agreement dated June 21, 1983, between the Company and
Alan L. Wurtzel, filed as Exhibit 10(h) to the
Company's Annual Report on Form 10-K for the fiscal
year ended February 28, 1993, (File No. 1-5767) is
expressly incorporated herein by this reference.
(i) Amendment dated December 2, 1986, to employment
agreement dated June 21, 1983, between the Company and
Alan L. Wurtzel, filed as Exhibit 10(k) to the
Company's Annual Report on Form 10-K for the fiscal
year ended February 28, 1989, (File No. 1-5767) is
expressly incorporated herein by this reference.
(j) Amendment dated May 24, 1989, to employment agreement
dated June 21, 1983, between the Company and Alan L.
Wurtzel, filed as Exhibit 10(p) to the Company's Annual
Report on Form 10-K for the fiscal year ended February
28, 1990, (File No. 1-5767) is expressly incorporated
herein by this reference.
(k) Amendment dated June 16, 1992, to employment agreement
dated June 21, 1983, between the Company and Alan L.
Wurtzel, filed as Exhibit 10(k) to the Company's Annual
Report on Form 10-K for the fiscal year ended February
28, 1993, (File No. 1-5767) is expressly incorporated
herein by this reference.
(l) Employment agreement between the Company and Richard L.
Sharp dated October 17, 1986, and amendment dated
August 1, 1989, to the employment agreement, filed as
Exhibit 10(m) to the Company's Annual Report on Form
10-K for the fiscal year ended February 28, 1993, (File
No. 1-5767) is expressly incorporated herein by this
reference.
(m) Employment agreement dated June 1, 1988, between the
Company and John A. Fitzsimmons, filed as Exhibit 10(n)
to the Company's Annual Report on Form 10-K for the
fiscal year ended February 28, 1989, (File No. 1-5767)
is expressly incorporated herein by this reference.
(n) Amendment dated August 1, 1989, to employment agreement
dated June 1, 1988, between the Company and John A.
Fitzsimmons, filed as Exhibit 10(o) to the Company's
Annual Report on Form 10-K for the fiscal year ended
February 28, 1993, (File No. 1-5767) is expressly
incorporated herein by this reference.
(o) Employment agreement dated June 1, 1988, between the
Company and Walter Bruckart, filed as Exhibit 10(o) to
the Company's Annual Report on Form 10-K for the fiscal
year ended February 28, 1989, (File No. 1-5767) is
expressly incorporated herein by this reference.
(p) Amendment dated August 1, 1989, to employment agreement
dated June 1, 1988, between the Company and Walter
Bruckart, filed as Exhibit 10(q) to the Company's
Annual Report on Form 10-K for the fiscal year ended
February 28, 1993, (File No. 1-5767) is expressly
incorporated herein by this reference.
(q) Amendment dated March 8, 1995, to employment agreement dated
June 1, 1988, between the Company and Walter Bruckart is
filed herewith.
(r) Employment agreement dated May 25, 1989, between the
Company and Michael T. Chalifoux, filed as Exhibit
10(x) to the Company's Annual Report on Form 10-K for
the fiscal year ended February 28, 1991, (File No. 1-
5767) is expressly incorporated herein by this
reference.
(s) Amended and restated employment agreement dated May 12, 1995,
between the Company and Richard S. Birnbaum is filed
herewith.
(t) Company's Annual Performance-Based Bonus Plan filed as
Exhibit B to the Company's Definitive Proxy Statement
dated May 13, 1994, for the Annual Meeting of
Stockholders held on June 14, 1994, (File No. 1-5767)
is expressly incorporated herein by this reference.
(13) Annual Report to Stockholders
(21) Subsidiaries of the Company
(23) Consents of Experts and Counsel
Consent of KPMG Peat Marwick LLP to Incorporation by Reference of
Independent Auditors' Reports into the Company's Registration
Statements on Form S-8.
(24) Powers of Attorney
(27) Financial Data Schedule
* All contracts listed under Exhibit 10 are management contracts,
compensatory plans or arrangements of the Company required to be filed
as an exhibit.
S-1
Schedule II
CIRCUIT CITY STORES, INC. AND SUBSIDIARIES
Valuation and Qualifying Accounts and Reserves
(Amounts in thousands)
Balance at Charged Charge-offs Balance at
Beginning to less End of
Description of Year Income Recoveries Year
Reserves deducted from
assets to which they apply:
Year ended February 28, 1993:
Allowance for doubtful accounts $3,331 $2,498 $ (580) $5,249
Year ended February 28, 1994:
Allowance for doubtful accounts $5,249 $4,604 $(3,002) $6,851
Year ended February 28, 1995:
Allowance for doubtful accounts $6,851 $1,292 $(1,406) $6,737
S-2
Independent Auditors' Report on Financial Statement Schedule
The Board of Directors
Circuit City Stores, Inc.:
Under date of April 5, 1995, we reported on the consolidated balance sheets
of Circuit City Stores, Inc. and subsidiaries (the Company) as of February
28, 1995 and 1994, and the related consolidated statements of earnings,
stockholder's equity and cash flows for each of the fiscal years in the
three-year period ended February 28, 1995, as contained in the February 28,
1995 annual report to stockholders. These consolidated financial
statements and our report thereon are incorporated by reference in the
annual report on Form 10-K for the year ended February 28, 1995. In
connection with our audits of the aforementioned consolidated financial
statements, we also have audited the related financial statement schedule
as listed in Item 14(a)2 of this Form 10-K. This financial statement
schedule is the responsibility of the Company's management. Our
responsibility is to express an opinion on this financial statement
schedule based on our audits.
In our opinion, such schedule, when considered in relation to the basic
consolidated financial statements taken as a whole, presents fairly, in all
material respects, the information set forth therein.
s/KPMG Peat Marwick LLP
Richmond, Virginia
April 5, 1995