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FORM 10-K
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED]
For the fiscal year ended June 29, 1996
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. 1-8739
BURLINGTON COAT FACTORY WAREHOUSE CORPORATION
---------------------------------------------
(Exact Name of Registrant as specified in
its charter)
Delaware 22-1970303
- ---------------------------------- ---------------------
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification Number)
1830 Route 130
Burlington, New Jersey 08016
------------------------ ----------
(Address of principal (Zip Code)
executive offices)
Registrant's telephone number,
including area code: (609) 387-7800
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange
on which registered
----------------------------- ---------------------------
Common Stock, $1.00 par value New York Stock Exchange, Inc.
per share
Securities Registered pursuant to Section 12(g) of the Act:
Title of Class
--------------
None
Page 1
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 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. [ ]
The aggregate market value of the common stock, $1.00 par
value ("Common Stock"), of the registrant held by non-affiliates of the
registrant, as determined by reference to the closing sale price of the
Common Stock on the New York Stock Exchange as of August 31, 1996,
was $165,915,325.
As of August 31, 1996, the number of shares of Common Stock,
$1.00 par value, outstanding was 40,663,563.
Documents incorporated by Part of Form 10-K into which
reference into this report document is incorporated
- -------------------------- -----------------------------
Registrant's Proxy Statement Part III
to be filed pursuant to
Regulation 14A
Page 2
PART I
Item 1. Business
Burlington Coat Factory Warehouse Corporation and its
subsidiaries (the "Company" or "Burlington Coat") operates a chain
of "off-price" apparel stores which offer a broad range of moderate
to higher priced, current brand name merchandise for men, women and
children at prices substantially below traditional full retail
prices generally charged by department and specialty stores.
In addition, Burlington Coat offers customers a complete line of
men's, women's and children's wear as well as a linens, bath shop
items, gifts and accessories department in 186 of its stores and a
children's furniture department in approximately 155 of its stores.
The Company's policy of buying significant quantities of merchandise
throughout the year, maintaining inventory control and using a
"no-frills" merchandising approach, allows it to offer merchandise
at prices below traditional full retail prices. The sale of
irregular or discontinued merchandise represents only a small portion
of the Company's business. Merchandise is displayed on easy access racks,
and sales assistance generally is available. Clothing alteration services
are available on a limited basis in many stores for an additional charge.
Burlington Coat's practice of purchasing outerwear early
in each fashion season and of reordering in rapid response to sales
has enabled it to maintain a large, current and varied selection of
outerwear throughout each year. Although the Company believes that
this practice helps attract customers to its stores, to the extent
the Company maintains a relatively large volume of merchandise,
particularly outerwear, the risks related to style changes, weather
and other seasonal factors, and economic conditions are necessarily
greater than if the Company maintained smaller inventories.
An important factor in Burlington Coat's operations has
been its continued ability to purchase desirable, first-quality
current brand labeled merchandise directly from manufacturers on
terms at least as favorable as those offered large retail
department and specialty stores. The Company estimates that over
1000 manufacturers of apparel, including over 300 manufacturers of
outerwear, are represented at the Company's stores, and that no
manufacturer accounted for more than 5% of the Company's purchases
during the last full fiscal year. The Company does not maintain
any long-term or exclusive commitments or arrangements to purchase
from any manufacturer. No assurance can be given that the Company
will be able to continue to purchase such merchandise directly from
manufacturers or to continue its current selling price structure.
See "Competition."
Page 3
The Company sells its merchandise to retail customers for
cash and accepts checks and most major credit cards. The Company's
"Cohoes" division also offers its own credit card. In addition,
the Company sells on a layaway plan and offers special orders on
selected merchandise. It does not offer refunds, except on furs,
defective merchandise and certain sales of specialty retail operations, but
will exchange or give store credit slips for merchandise returned
within a prescribed period of time.
The Company advertises primarily on television and, to a
lesser extent, in regional and local newspapers and radio. During
the past three fiscal years, advertising expenditures have averaged
approximately 2.7% of total revenues.
The Stores
- ----------
As of August 31, 1996, the Company operated 244 stores,
all but 19 of which are located in leased facilities ranging in
size (including storage space) from approximately 15,000 to
approximately 163,000 square feet, with an average area of
approximately 64,000 square feet. Selling space accounts for
over four-fifths of the total area in most stores.
All of the Company's stores are either free-standing or are located
in shopping malls or strip shopping centers. The Company believes that its
customers are attracted to its stores principally by the availability of a
large assortment of first-quality current brand name merchandise at
attractive prices.
The Company also operates stores under the names "Cohoes
Fashions," "Decelle," "Luxury Linens," "Totally 4 Kids," "Baby
Depot," and "Fit For Men." Cohoes Fashions offers merchandise in
the middle to higher price range. Decelle offers merchandise in
the moderate price range for the entire family with an emphasis on
children's and youth wear. Luxury Linens is a specialty
store for linens, bath shop items, gifts and accessories and offers
merchandise in the middle to higher range. Totally 4 Kids is a moderate to
upscale concept store offering maternity wear, baby furniture, children's wear
from toddlers up to teens, children's books, toys, computer software for kids
and educational tapes in a family environment. Baby Depot is a concept store
specializing in infant to toddler apparel, baby and juvenile furniture
and furnishings and accessories. Fit For Men is a stand alone mens store
catering to the needs of "hard to fit" men (big, tall, husky, athletic,
portly, short and small).
In the past, Burlington Coat generally has selected sites
for its stores where there are suitable existing structures which
can be refurbished, and, if necessary, enlarged, in a manner
Page 4
consistent with the Company's merchandising concepts. In some
cases, space has been substantially renovated or built to
specifications given by Burlington Coat to the lessor. Such
properties have been available to the Company on lease terms which
it believes have been favorable. See "Growth and Expansion."
The stores generally are located in close proximity to
population centers, department stores and other retail operations
and are usually established near a major highway or thoroughfare,
making them easily accessible by automobile. Since the Company's
stores are generally located outside of urban centers and the
Company believes that some of its customers drive long distances
to visit store locations, it is likely that the Company
would be adversely affected by any conditions which were to
result in the reduction of automobile use.
The Company owns substantially all the equipment used
in its stores and believes that its selling space is well utilized and
that its equipment is well maintained and suitable for its
requirements.
At August 31, 1996, a majority of the Company's stores
contained one or more departments leased by unaffiliated parties
for the sale of jewelry and accessories. During the fiscal
year ended June 29, 1996, the Company's rental income from all of its
leased departments aggregated less than 1% of the Company's
total revenues.
Central Distribution
- --------------------
Central distribution, warehousing, ticketing and marking
services are extended to approximately fifty percent of the dollar
volume of the Company's merchandise through its office and
warehouse/distribution facility in Burlington, New Jersey. This
facility is capable of servicing the Company's present stores as
well as accommodating expansion, with certain modifications, except
for juvenile furniture inventory. The Company is leasing
approximately 85,000 square feet of warehouse space nearby to its
existing warehouse distribution center for the purpose of
warehousing and distributing its juvenile furniture inventory.
Growth and Expansion
- --------------------
Since 1972 when its first store was opened in Burlington,
New Jersey, the Company has expanded to two hundred eighteen
Burlington Coat stores, five Cohoes Fashions stores, eight Decelle
stores, seven stand-alone Luxury Linens stores, four Totally 4 Kids
store, one stand alone Baby Depot store and one Fit For Men store
as of August 31, 1996.
Page 5
At August 31, 1996 the Company operated stores in 41 states and
is exploring expansion opportunities both within its current market areas
and in other regions. For fiscal 1997, the Company has plans to open
approximately seven to ten additional Burlington Coat Factory stores and
one Totally 4 Kids store. The Company continues to monitor store
profitability and should economic factors change, some store closings could
be possible.
The Company believes that its ability to find
satisfactory locations for its stores is essential for the
continued growth of its business. The opening of stores generally
is contingent upon a number of factors, including the availability
of desirable locations with suitable structures and the negotiation
of acceptable lease terms. There can be no assurance, however,
that the Company will be able to find suitable locations for new
stores or that even if such locations are found and acceptable
lease terms are obtained, the Company will be able to open the
number of new stores presently planned.
The Company operates its own jewelry department in sixteen stores
as of August 31, 1996. The jewelry program consists of karat gold
and precious and semi-precious stone jewelry, and in some stores may include
brand-name watches.
In May of 1994, the Company opened its first "Totally
4 Kids" store in Sterling, Virginia. Two additional Totally 4 Kids
stores were opened in Tulsa, Oklahoma and Cherry Hill, New Jersey,
respectively, during fiscal 1995 (subsquently, the Tulsa, Oklahoma Totally
4 Kids store and a Luxury Linens sister store were converted to a Burlington
Coat Factory store). During fiscal 1996 the Company opened two additional
Totally 4 Kids stores in Milpitas, California and Nashville, Tennessee. The
store caters to the moderate to upscale market and offers maternity wear,
baby furniture, children's wear up to teens, children's books, educational
tapes, computer software for kids, and toys in a family environment. The
Company plans to open one additional Totally 4 Kids store in fiscal
1997.
In September, 1994, the Company entered into a license
arrangement with a vendor to supply department store brand or
better fragrance and cosmetics to 127 stores on a test basis.
The program was expanded to 216 stores, including five Cohoes Fashions
stores and five Decelle stores, and the arrangement has been extended
through January 31, 1998.
The Company seeks to maintain its competitive position
and improve its prospects by periodically reevaluating its methods
of operation, including its pricing and inventory policies, the
format of its stores and its ownership or leasing of stores.
Page 6
Seasonality
- -----------
The Company's business is seasonal, with its highest
sales occurring in the second fiscal quarter of each year.
For the past six fiscal years, approximately 57% of the Company's net sales
have occurred during the period from September through January.
Weather, however, continues to be an important contributing factor
to the sale of clothing in the fall, winter and spring seasons.
Generally, the Company's sales are higher if the weather is cold
during the early fall and winter months and warm during the early
spring months. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations."
Operations
- ----------
Each store has a manager and one or more assistant
managers, as well as department managers. The Company also employs
regional and district managers to supervise overall store operating
and merchandising policies. Major merchandising decisions are
made, overall policies are set, and accounting and general
financial functions for the Company's stores are conducted, at
corporate headquarters. In addition, the Company employs
directors of administration, store operations, loss prevention and
merchandise presentation who are in charge of those functions on a
Company-wide basis.
Merchandise purchased by the Company is either shipped
directly from manufacturers to store locations or distributed
through the Company's warehousing and distribution facility. See
"Central Distribution." A computerized merchandise information
system provides regular detailed reports of sales and inventory
levels for each store and assists the merchandise managers and
buyers in monitoring and, where necessary, adjusting inventory
levels.
At June 29, 1996, the Company had approximately 17,000
employees, including a large number of part-time and seasonal
employees which varies throughout the year. Of the Company's
employees, only those employed at one of its stores and at its
warehousing facility (aggregating up to 500 persons at its peak and
approximately 300 persons at June 29, 1996) are covered by
collective bargaining agreements. The Company cannot predict
whether any future attempts to unionize its employees will be
successful. The Company believes that its relationship with its
employees has been and remains satisfactory.
Page 7
Competition
- -----------
General. The retail apparel business is highly
competitive. Competitors include other individual, regional and
national "off-price" retailers offering similar merchandise at
comparable prices as well as individual and chain stores, some of
which are regional and national department and discount store
chains. At various times throughout the year department store
chains and specialty shops offer brand name merchandise at
substantial markdowns, which can result in prices approximating
those offered by the Company. Some of the Company's competitors
are considerably larger than the Company and have substantially
greater financial and other resources.
Resale Price Maintenance. Since it is the general policy
of the Company to sell at lower than the traditional full retail
price, its business may be adversely affected by manufacturers who
attempt to maintain the resale price of their merchandise by
refusing to sell, or to grant advertising allowances, to purchasers
who do not adhere to their suggested retail prices. Federal
legislation and regulations have been proposed from time to time
which, if enacted, would be helpful to manufacturers attempting
to establish minimum prices or withhold allowances. In addition,
the rules against resale price maintenance have been subject to
challenge in the courts from time to time.
The Company has, on several occasions in the past,
brought lawsuits against certain manufacturers and department store
chains and complained to the Federal Trade Commission seeking more
vigorous enforcement of existing Federal laws, as well as testified
before Congress in connection with proposed legislation concerning
the Federal antitrust laws.
Item 2. Properties
----------
The Company owns the land and building for nineteen of its stores
and is a 50% partner in a partnership which owns the building in which one
store is located. Generally, however, the Company's policy has been to lease
its stores. Store leases generally provide for fixed monthly rental payments,
plus the payment, in most cases, of real estate taxes and other charges with
escalation clauses. In certain locations, the Company's store leases contain
formulas providing for the payment of additional rent based on sales.
The following table shows the years in which store leases
existing at August 31, 1996 expire:
Page 8
Fiscal Years Number of Leases Expiring with
Ending June 30 Expiring Renewal Options
- -------------- ---------------- ---------------
1997-1999 48 43
2000-2001 31 25
2002-2003 16 9
2004-2005 35 21
2006-2007 20 12
Thereafter 75 29
--- ---
Total 225 139
=== ===
The Company owns five buildings in Burlington, New
Jersey. Of these buildings, two are used by the Company as retail
space. In addition, the Company owns approximately 97 acres of
land in the Townships of Burlington and Florence, New Jersey on
which the Company has constructed its office and warehouse/distribution
facility. The Company leases approximately 85,000 square feet of space
nearby to the warehouse/distribution facility to store its juvenile
furniture inventory. The Company leases approximately 20,000
square feet of office space in New York City with the right of
occupancy that expires in January 2001.
Item 3. Legal Proceedings
-----------------
In late September 1994, three putative class action lawsuits, P.
Gregory Buchanan v. Monroe G. Milstein, et al., No. 94-CV-4663, Jacob Turner
v. Monroe G. Milstein, et al., No. 94-CV-4737, and Ronald Abramoff v. Monroe
G. Milstein, et al., No. 94-CV-4751 (collectively, the "Class Actions"), were
filed against the Company, Monroe G. Milstein, Stephen E. Milstein and Robert
L. LaPenta, Jr. in the United States District Court for the District of New
Jersey. By Order entered November 15, 1994, the Court consolidated the Class
Actions under the caption In re Burlington Coat Factory Securities Litigation.
On January 17, 1995, plaintiffs filed their Consolidated Amended and
Supplemental Class Action Complaint (the "Amended Complaint"), naming as
defendants, in addition to those originally named in September 1994, Andrew
R. Milstein and Mark A. Nesci. The Amended Complaint sought unspecified
damages in connection with alleged violations of Sections 10(b) (and Rule
10b-5 promulgated thereunder) and 20(a) of the Securities Exchange Act of
1934, as amended. The Amended Complaint alleged material misstatements and
omissions by the Company and certain of its officers and directors that
plaintiffs
Page 9
alleged caused the Company's common stock to be artificially inflated during
the proposed Class Period, which was defined in the Amended Complaint as the
period from October 4, 1993 through September 23, 1994. On March 3, 1995,
the Company and the individual defendants served a motion to dismiss
plaintiffs' Amended Complaint. That motion was fully briefed and filed with
the Court on May 17, 1995; oral argument on that motion was held on July 20,
1995. On February 20, 1996, the District Court granted the Company's motion
and dismissed the plaintiffs' Amended Complaint in its entirety. In March,
1996, the plaintiffs filed an appeal from the District Court's decision in
the United States Court of Appeals for the Third Circuit (the "Appeal").
Although the Company is unable at this time to assess the probable outcome of
the Appeal or the materiality of the risk of loss in connection therewith,
the Company fully agrees with the District Court's decision to dismiss the
Amended Complaint in its entirety, and intends to vigorously oppose the
plaintiffs' efforts to overturn the District Court's decision.
In the past, the Company has initiated several lawsuits in its
effort to stop what it believes to be unlawful practices on the part of
certain manufacturers and large retailers to control the prices at which
certain items of merchandise may be sold at the Company's stores.
Item 4. Submission of Matters to a Vote
of Security Holders
-------------------------------
The Company did not submit any matter to a vote of its security
holders during the fourth quarter of fiscal 1996.
PART II
Item 5. Market for Registrant's Common Equity
and Related Stockholder Matters
-------------------------------------
The Company's Common Stock is traded on the New York
Stock Exchange, Inc. and its trading symbol is "BCF."
The following table provides the high and low closing
prices on the New York Stock Exchange for each fiscal quarter
for the period from July 3, 1994 to June 29, 1996 and for the two months
ended August 31, 1996.
Page 10
Period Low Price High Price
------ --------- ----------
July 3, 1994 to
October 1, 1994 12 2/3 24 3/4
October 2, 1994 to
December 31, 1994 10 1/4 14 1/8
January 1, 1995 to
April 1, 1995 8 1/2 11 7/8
April 2, 1995 to
July 1, 1995 9 7/8 11 1/4
July 2, 1995 to
September 30, 1995 10 14 1/8
October 1, 1995 to
December 30, 1995 10 1/4 13 1/4
December 31, 1995 to
March 30, 1996 9 3/8 12 1/4
March 31, 1996 to
June 29, 1996 10 1/8 12 1/8
June 30, 1996 to
August 31, 1996 10 11 1/8
As of August 31, 1996 there were 547 record holders of
the Company's Common Stock. The number of record holders does not
reflect the number of beneficial owners of the Company's Common
Stock for whom shares are held by Cede & Co., certain brokerage
firms and others.
Dividend Policy
- ---------------
The Company has not paid cash dividends in the past and does not
currently plan to do so. It is the present policy of the Company's Board of
Directors to retain future earnings to finance the growth and development of
the Company's business. Any payment of cash dividends in the future will be
at the discretion of the Company's Board of Directors and will depend upon
the financial condition, capital requirements and earnings of the Company as
well as other factors which the Board of Directors may deem relevant.
Page 11
Item 6. Selected Financial Data
-----------------------
The following table sets forth certain selected financial data:
6/27/92 7/3/93 7/2/94 7/1/95 6/29/96
(In thousands of dollars, except per share data)
Statement of
Operations:
- --------------
Revenues $1,013,470 $1,214,783 $1,480,676 $1,597,028 $1,610,892
Net Income 31,368 42,903(1) 45,383 14,866 29,013
Net Income per Share .78(2) 1.06(1)(2) 1.12 .37 .71
Balance Sheet Data:
- -------------------
Total Assets $491,940 $585,481 $725,439 $ 735,269 $704,731
Working Capital 252,364 275,113 278,590 245,468 288,107
Long-Term Debt 94,234 91,428 91,369 83,298 74,907
Stockholders' Equity 278,712 323,111 369,857 385,019 413,745
__________________
[FN]
(1) Effective June 28, 1992, the Company adopted Statement of
Financial Accounting Standards No. 109, "Accounting for
Income Taxes." The Company reflected the cumulative
effect of change in accounting for income taxes by
recording a benefit of $.6 million ($.02 per share)
during fiscal 1993.
(2) Adjusted to give retroactive effect to three-for-two stock
splits effective in July, 1992 and September, 1993.
[/FN]
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations
--------------------------------------------------
The Company maintains its records on the basis of a 52-53
week fiscal year ending on the Saturday closest to June 30. Fiscal 1996
ended on June 29, 1996, fiscal 1995 ended on July 1, 1995 and fiscal 1994
ended on July 2, 1994 and comprised 52 weeks each.
Results of Operations
Fiscal Years Ended July 2, 1994,
July 1, 1995 and June 29, 1996
--------------------------------
The following table sets forth certain items in the
consolidated statements of operations as a percentage of net sales
for the fiscal years ended July 2, 1994, July 1, 1995 and June 29, 1996.
Page 12
Percentage of Net Sales
-----------------------
Fiscal Year Ended
-------------------------
7/2/94 7/1/95 6/29/96
Net Sales 100.0% 100.0% 100.0%
------ ------ ------
Costs and expenses:
Cost of sales 65.2 66.9 65.4
Selling and administrative
expenses 28.6 29.7 30.1
Depreciation and amortization 1.4 1.7 1.9
Interest expense 0.7 0.9 0.7
--- --- ---
95.9 99.2 98.1
---- ---- ----
Other income 0.8 0.7 1.2
--- --- ---
Income before income taxes 4.9 1.5 3.1
Provision for income taxes 1.8 0.6 1.3
--- --- ---
Net income 3.1% 0.9% 1.8%
==== ==== ====
Results of Operations
- ---------------------
Performance in 1996 compared with 1995
- --------------------------------------
Net sales increased $7.0 million (.4%) for fiscal 1996 compared with
fiscal 1995. Comparative store sales decreased 7.2%. The Company believes
the decrease in comparative store sales this year is due mainly to a weak
apparel retail environment. New Burlington Coat Factory Warehouse stores
opened during fiscal 1996 contributed $100.2 million to this year's sales.
Stores which were in operation a year ago, but which were closed prior to
this year contributed $15.9 million to last year's sales. The Cohoes stores
Page 13
showed a comparative stores sale descrease of 11.3%, while contributing $40.8
million to consolidated sales for the fiscal year. Sales in fiscal 1996 for
the Decelle stores were $34.6 million compared with $33.1 million in fiscal
1995. Two Totally 4 Kids stores, and one Luxury Linens store, opened during
fiscal 1996 contributed sales of $6.0 million to net sales. Sales from leased
departments, included in the twelve month net sales figure, were $34.9 million
compared with $27.4 million last year.
The Company closed nine stores during fiscal 1996. These stores
contributed $15.5 million to net sales for the fiscal year ended
June 29, 1996 compared with $23.3 million last year.
Other income (consisting primarily of rental income from leased
departments, investment income and miscellaneous items) increased to $18.9
million for the year ended June 29, 1996 compared with $12.1 million for the
year ended July 1, 1995. The increase for the fiscal year was due in part
to a gain of approximately $1.8 million on the sale of the Company's
Secaucus, New Jersey facility, a portion of which the Company had been
leasing to third parties and a portion of which it uses as a store. In
addition, increases in interest income of $4.2 million were the result of
increases in investable funds generated by the Company through its continued
plan of maintaining lower inventory levels compared with inventory levels of
a year ago. Furthermore, during the third quarter of fiscal 1996, the
Company recorded non-recurring miscellaneous income of $4.0 million.
Partially offsetting these increases was a loss of $1.8 million for the
twelve month period ended June 29, 1996, recorded for the writeoff of
leasehold improvements of stores closed during this fiscal year.
Cost of sales decreased $19.8 million (1.9%) for fiscal 1996 compared with
fiscal 1995. The dollar decrease in cost of sales was due in part
to a 7.2% decline in comparative store sales. This was partially offset by
cost of sales from new stores opened during the year. Cost of sales as a
percentage of net sales decreased from 66.9% a year ago to 65.4% this year.
Cost of sales declined this year as a percentage of net sales due to higher
initial markups as a result of better opportunistic buys. In addition,
markdowns as a percentage of sales were down due to the significantly lower
inventory levels carried at the stores. Freight as a percentage of purchases
was down approximately 0.3% percent this year over last year.
Selling and administrative expenses increased by $7.9 million (1.7%) from
fiscal 1995 to fiscal 1996. This increase in expense was due
primarily to costs associated with new store operations. As a percentage of
net sales, selling and administrative expenses were 30.1% in the 1996 fiscal
year compared with 29.7% for the 1995 fiscal year, an increase of 0.4%.
Page 14
Depreciation and amortization expense amount to $29.9 million in fiscal
1996 compared with $26.3 million in fiscal 1995. This increase of $3.6 million
in the fiscal 1996 period compared with fiscal 1995 is attributable to new
stores opened during the year as well as remodeling and fixturing of existing
stores.
Interest expense decreased $1.9 million for the fiscal year ended
June 29, 1996 compared with the fiscal year ended July 1, 1995. The
decrease in interest expense is the result of decreases in borrowing levels
associated with the Company's revolving credit and term loan agreements and
the refinancing of its industrial development bonds.
The provision for income taxes increased to $20.0 million for the fiscal
year ended June 29, 1996 from $10.1 million for the fiscal year ended July 1,
1995. The effective tax rate was 40.8% for the year ended June 29, 1996
compared with 40.4% for fiscal 1995.
Net income increased $14.1 million to $29.0 million for fiscal 1996
from $14.9 million for fiscal 1995. Income per share was $.71 per share for
fiscal 1996 compared with $.37 for fiscal 1995.
The Company's business is seasonal, with its highest sales occurring in
the month of October, November, December of each year. The Company's net
income generally reflects the same seasonal pattern as its net sales. In the
past, substantially all of the Company's profits have been derived from
operations during the months of October, November, and December.
Performance in 1995 compared with 1994
- --------------------------------------
Net sales increased $116.5 million (7.9%) for fiscal 1995
compared to fiscal 1994. The increase in fiscal 1995 over fiscal
1994 was due to $101.1 million in sales from new Burlington Coat
stores, $8.2 million from Luxury Linens stores, $4.1 million from
Totally 4 Kids stores and $1.7 million each from Fit For Men and
Baby Depot stores opened during the year. Cohoes Fashions stores,
Decelle stores and the Mexican operations (sometimes collectively
referred to as the "Specialty Operations") contributed additional
sales over the prior year of $14.7 million. Offsetting these sales
was a decrease in Burlington Coat comparative store sales of $75.4
million (5.4%). Sales from leased departments this year were $27.4
million compared with $18.8 million last year. Lack of consumer
interest in apparel throughout the second half of fiscal 1995, the
highly promotional retail environment and unseasonably warm weather
in the fall and winter months were all factors affecting sales
results for fiscal 1995.
Page 15
Other income in fiscal 1995 decreased $.2 million from
fiscal 1994. The primary reason for the slight decrease was a decline in
investment income. Investment income was reduced by $.9 million due to the
higher inventory levels and capital expenditures during fiscal 1995 absorbing
excess investable funds. This decrease was offset by an increase in rent
income.
Cost of sales increased by $103.4 million (10.8%) from
the fiscal 1994 period to the fiscal 1995 period. The dollar in-
crease in cost of sales was attributable to the increases in unit
sales from new stores opened during the period. The decrease in
comparative stores sales volume of 5.4% in the 1995 period offset
in part the additional cost of sales from new units. Cost of sales
as a percentage of net sales increased to 66.9% in the 1995 period.
The percentage increase in 1995 over 1994 was primarily due to
additional markdowns taken as a result of the weaker apparel sales
performance during the year.
Selling and administrative expenses increased by
$51.9 million (12.4%) from fiscal 1994 to fiscal 1995 primarily as
a result of increased expenses in connection with the increase in
the number of stores. As a percentage of net sales, selling and
administrative expenses were 29.7% in the 1995 period compared with
28.6% for the prior fiscal year. In fiscal 1995, the percentage
increase over 1994 was primarily due to a decrease in comparative
store sales of 5.4%.
The increase in depreciation expense of $4.8 million in
the 1995 period was attributable to 29 new stores opened during the
period, remodeling and fixturing of existing stores, as well as the
acquisition of one additional store.
Interest expense increased $3.7 million (37.8%) from the
1994 period to the 1995 period. The increase in interest expense
in the fiscal 1995 period was the result of the Company's increased
usage of its lines of credit during the year as well as an increase
in the average interest rate from last year of 3.8% to the current
year's average borrowing rate of 5.7% on short-term debt.
The effective income tax rates were 37.3% and 40.4% for
the 1994 and 1995 periods, respectively. The increase in the tax
rate in fiscal 1995 was due to the elimination of the Targeted Jobs
Tax credit after December 31, 1994 and increases in state income
taxes as a percentage of pre-tax income.
Income before cumulative effect of change in accounting
for income taxes decreased $30.5 million for fiscal year ended July
1, 1995 compared with the 1994 fiscal year. Income per share
before cumulative effect of change in accounting for income taxes
decreased to $0.37 per share for fiscal 1995 from $1.12 per share
for fiscal 1994, which reflected a decline in operating income of
Page 16
the Company. The fiscal 1995 performance reflected a weak U.S.
apparel environment and an unusually warm fall and winter. As a
result of the weak sales performance in a highly promotional U.S.
retail environment, higher markdowns reduced the Company's
gross profit margin percentage in fiscal 1995. In addition,
declining comparative store sales negatively impacted
operating expense leverage.
Liquidity and Capital Resources
- -------------------------------
During the year ended June 29, 1996, the Company opened
fifteen stores, including eleven Burlington Coat Factory
Warehouse stores, one "Luxury Linens" store, two "Totally 4 Kids" stores
and one Decelle store. The Company closed nine stores during the fiscal year
ended June 29, 1996. Expenditures incurred to acquire, set up and fixture
new stores opened during fiscal 1996 were approximately
$16.2 million. In addition, the Company expended approximately $7.3 million
for capital improvements and refurbishing of existing stores and its former
Secaucus, New Jersey property (which was sold September 29, 1995). The
Company estimates that it will spend approximately $20.2 million for capital
expenditures (i.e., fixtures, equipment and leasehold improvements) in
connection with the opening of from eight to eleven new stores and remodeling
of existing stores during fiscal 1997.
Working capital increased to $288.1 million at June 29, 1996 from
$245.5 million at July 1, 1995. At July 2, 1994, working capital was $278.6
million.
Total funds provided from operations for the fiscal years
ended July 2, 1994, July 1, 1995 and June 29, 1996 were $72.6 million,
$45.5 million and $66.9 million, respectively. Total funds from operations
are calculated by adding back to net income non-cash expenditures such as
depreciation and deferred taxes.
Net cash provided by operating activities of $163.4 million for the
fiscal year ended June 29, 1996, increased from $43.0 million in net cash
provided from operating activities for fiscal 1995. This increase in net
cash from operations was due mainly to a reduction in merchandise inventory
in the current year of $81.6 million versus a $16.9 million reduction in
fiscal 1995 and to the earnings improvements made in fiscal 1996 versus fiscal
1995.
The Company's long-term borrowings at June 29, 1996 include $72
million of long term subordinated notes issued by the Company to institutional
investors in June, 1990 ("the Notes") and an industrial development bond of
$10 million issued by the New Jersey Economic Development Authority. In July,
1996, the Company
Page 17
repurchased an additional $5.4 million of the Notes, leaving a remaining
outstanding principal balance of the Notes of $66.6 million.
The Notes mature on June 27, 2005 and bear interest at the rate of
10.6% per annum. The Notes have a remaining average maturity of 4.5 years
and are subject to mandatory payment in installments of $8.0 million each
without premium on June 27 of each year beginning in 1996. The Notes are
subordinated to senior debt, including, among others, bank debt and
indebtedness for borrowed money. The industrial development bond financing
(the "Bonds") consist of serial and term bonds. The serial bonds aggregate
$3.6 million and mature in series annually on September 1, beginning in 1996
and continuing to and including 2003. The term bonds consist of two portions,
$1.4 million maturing on September 1, 2005 and $5.0 million maturing on
September 1, 2010. The serial bonds bear interest ranging from 3.75% to 5.4%
per annum, and the term bonds bear interest at the rates of 5.60% for the
portion maturing on Sepember 1, 2005 and 6.125% per annum for the portion
maturing on September 1, 2010. The average interst rate and average maturity
of the Bonds are 5.84% and 9.78 years, respectively.
The Company has in place a committed line of credit
agreement in the amount of $50.0 million and $150.0 million in
uncommitted lines of credit. The maximum borrowings outstanding
under these lines were $120.4 million and $147.4 million during
fiscal 1996 and fiscal 1995, respectively. The average borrowings
outstanding under the lines were $38.7 million and $69.1 million
during fiscal 1996 and 1995, respectively. The weighted average
interest rate on outstanding borrowings during fiscal 1996 and 1995
were 6.3% and 5.7%, respectively. There were no short term borrowing
as of June 29, 1996, compared with short term borrowings
outstanding of $85.9 million at July 1, 1995.
The Company believes that its current capital
expenditures and operating requirements can be satisfied from
internally generated funds, from short term borrowings under its
revolving credit and term loan agreement as well as uncommitted
lines of credit and from its long term borrowings. The Company may
consider replacing some of its short term borrowing sources with long term
financing. Furthermore, to the extent that the Company decides to
purchase additional store locations, it may be necessary to finance
such acquisitions with additional long term borrowings.
On or about September 23, 1994 three separate putative
class actions were filed against the Company. These three actions
were consolidated and an amended complaint was served on January
17, 1995. The Company filed a motion to dismiss on May 17, 1995 and
a hearing on the motion was held on July 20, 1995. One February 20,
1996, the District Court dismissed the plaintiff's amended
Page 18
complaint in its entirely. In March, 1996, plaintiffs filed an appeal from
the District Court's decision. (See part II - Other Information,
Item 1 Legal Proceedings.) The Company is unable to determine the probability
of any potential loss with respect to these class actions suits or the
materiality thereof at this time and accordingly has not established
any reserve for this matter. However, the Company believes the actions
are without merit and intends to vigorously defend them.
Inflation
- ---------
Historically, the Company has been able to increase its
selling prices as the costs of merchandising and related operating
expenses have increased, and, therefore, inflation has not had a
significant effect on operations.
Item 8. Financial Statements and Supplementary Data
-------------------------------------------
See Index to Financial Statements and following pages.
Item 9. Changes in and Disagreements with Accountants
on Accounting and Financial Disclosure
---------------------------------------------
None
PART III
Item 10. Directors and Executive Officers of the
Registrant
---------------------------------------
Item 11. Executive Compensation
----------------------
Item 12. Security Ownership of Certain Beneficial
Owners and Management
----------------------------------------
Item 13. Certain Relationships and Related Transactions
----------------------------------------------
In accordance with General Instruction G(3) of the
General Instructions to Form 10-K, the information called for by
Items 10, 11, 12 and 13 is omitted from this Report and is
incorporated by reference to the definitive Proxy Statement to be
filed by the Company pursuant to Regulation l4A of the General
Rules and Regulations under the Securities Exchange Act of 1934,
which the Company will file not later than 120 days after June 29, 1996.
Page 19
PART IV
Item 14. Exhibits, Financial Statement Schedules,
and Reports on Form 8-K
----------------------------------------
(a) The following documents are filed as part of this
Report.
Page No.
1. Financial Statements
Index to Consolidated Financial 29
Statements
Independent Auditors' Report 30
Consolidated Balance Sheets 31
June 29, 1996 and July 1, 1995
Consolidated Statements of Operations 32
Fiscal Years Ended June 29, 1996,
July 1, 1995 and July 2, 1994
Consolidated Statements of 33
Stockholders' Equity for the
Fiscal Years Ended July 2, 1994,
July 1, 1995 and June 29, 1996
Consolidated Statements of Cash 34
Flows for the Fiscal Years
Ended June 29, 1996, July 1, 1995
and July 2, 1994
Notes to Consolidated Financial 36
Statements
2. Financial Statement Schedules
Schedule II - Valuation and 50
Qualifying Accounts
Schedules I, III, IV and V are omitted
because they are not applicable or not
required or because the required
information is included in the consol-
idated financial statements or notes
thereto.
Page 20
Page No.
3. Exhibits
3.1 Articles of Incorporation,
as amended 2/
3.2 By-laws 2/
*10.1 1993 Stock Incentive Plan 2/
10.2 Revolving Credit Agreement dated 56
August 30, 1985 between the
Company and BancOhio National
Bank, as amended through Amendment
No. 6.
10.3 Burlington Coat Factory Warehouse 154
Corporation 401(k) Profit-Sharing
Plan (as amended and restated
effective July 1, 1989)
10.4 Loan Agreement dated as of August 1, 1/
1995 by and between New Jersey
Economic Development Authority and
Burlington Coat Factory Warehouse
of New Jersey, Inc.
10.5 Assignment of Leases dated as of 1/
August 1, 1995 from Burlington
Coat Factory Warehouse of New
Jersey, Inc. to First Fidelity
Bank, National Association
_______________
[FN]
(1) Incorporated by reference to the Exhibits filed with the
Company's Annual Report on Form 10-K for the year ended July
1, 1995, File No. 1-8739.
(2) Incorporated by reference to the Exhibits filed with the
Company's Annual Report on Form 10-K for the year ended July
3, 1993, File No. 1-8739.
*Executive Compensation Plan
[/FN]
Page 21
Page No.
10.6 Mortgage and Security Agreement 1/
dated as of August 1, 1995
between Burlington Coat Factory
Warehouse of New Jersey, Inc. and
First Fidelity Bank, National
Association
10.7 Indenture of Trust dated as of 1/
August 1, 1995 by and between
New Jersey Economic Development
Authority and Shawmut Bank
Connecticut, National Association
10.8 Guaranty and Suretyship dated as of 1/
August 1, 1995 from the Company to
First Fidelity Bank, National
Association
10.9 Letter of Credit Reimbursement 1/
Agreement dated as of August 1, 1995
between Burlington Coat Factory
Warehouse of New Jersey,
Inc. and First Fidelity Bank,
National Association
10.10 Environmental Indemnity Agreement dated 1/
as of August 1, 1995 between Burlington
Coat Factory Warehouse of New Jersey,
Inc. and First Fidelity Bank,
National Association
10.11 Note Agreement dated June 27, 1990 1/
21 Subsidiaries of Registrant 199
23 Consent of Deloitte & Touche LLP, 201
independent certified public
accountants, to the use of
their report on the financial
statements of the Company for
the fiscal year ended June 29,
1996 in the Registration Statements
of the Company on Form S-8,
Registration No. 2-96332,
No. 33-21569, No. 33-51965 and
No. 33-61351
27 Financial Data Schedule 203
Page 22
EXECUTIVE COMPENSATION PLANS AND ARRANGEMENTS
---------------------------------------------
Description Location
----------- --------
1) 1993 Stock Incentive Plan Filed as Exhibit 10.1
to the Company's Annual
Report on Form 10-K for
the year ended July 3,
1993, Pages 103-130
(b) Reports on Form 8-K
During the period ended June 29, 1996 the Company filed two (2)
reports on Form 8-K.
Page 23
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.
BURLINGTON COAT FACTORY WAREHOUSE CORPORATION
---------------------------------------------
(Registrant)
By: /s/ Monroe G. Milstein
----------------------------
Monroe G. Milstein, President
Dated: September 27, 1996
Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed below by the following persons on behalf
of the registrant and in the capacities and on the dates indicated.
Name Title Date
- ---- ----- ----
/s/ Monroe G. Milstein Chief Executive Officer September 27, 1996
Monroe G. Milstein and President (Principal
Executive Officer);
Director
/s/ Robert L. LaPenta, Jr. Controller (Principal September 27, 1996
- ------------------------- Financial and
Robert L. LaPenta, Jr. Accounting Officer)
/s/ Henrietta Milstein Director September 27, 1996
- -------------------------
Henrietta Milstein
- ------------------------- Director September ___, 1996
Harvey Morgan
/s/ Andrew R. Milstein Director September 27, 1996
- -------------------------
Andrew R. Milstein
/s/ Stephen E. Milstein Director September 27, 1996
- -------------------------
Stephen E. Milstein
/s/ Mark A. Nesci Director September 27, 1996
- -------------------------
Mark A. Nesci
- ------------------------- Director September ___, 1996
Irving Drillings
Page 24
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.
BURLINGTON COAT FACTORY WAREHOUSE CORPORATION
---------------------------------------------
(Registrant)
By: _____________________________
Monroe G. Milstein, President
Dated: September , 1996
Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed below by the following persons on behalf
of the registrant and in the capacities and on the dates indicated.
Name Title Date
- ---- ----- ----
________________________ Chief Executive Officer September __, 1996
Monroe G. Milstein and President (Principal
Executive Officer);
Director
________________________ Controller (Principal September __, 1996
Robert L. LaPenta, Jr. Financial and
Accounting Officer)
________________________ Director September __, 1996
Henrietta Milstein
/s/Harvey Morgan Director September 27, 1996
- ------------------------
Harvey Morgan
________________________ Director September __, 1996
Andrew R. Milstein
________________________ Director September __, 1996
Stephen E. Milstein
________________________ Director September __, 1996
Mark A. Nesci
________________________ Director September __, 1996
Irving Drillings
Page 25
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.
BURLINGTON COAT FACTORY WAREHOUSE CORPORATION
---------------------------------------------
(Registrant)
By: _____________________________
Monroe G. Milstein, President
Dated: September , 1996
Pursuant to the requirements of the Securities Exchange Act of
1934, this report has been signed below by the following persons on behalf
of the registrant and in the capacities and on the dates indicated.
Name Title Date
________________________ Chief Executive Officer September __, 1996
Monroe G. Milstein and President (Principal
Executive Officer);
Director
________________________ Controller (Principal September __, 1996
Robert L. LaPenta, Jr. Financial and
Accounting Officer)
________________________ Director September __, 1996
Henrietta Milstein
________________________ Director September __, 1996
Harvey Morgan
________________________ Director September __, 1996
Andrew R. Milstein
________________________ Director September __, 1996
Stephen E. Milstein
________________________ Director September __, 1996
Mark A. Nesci
/s/Irving Drillings Director September 27, 1996
- ------------------------
Irving Drillings
Page 26
[THIS PAGE INTENTIONALLY LEFT BLANK]
Page 27
[THIS PAGE INTENTIONALLY LEFT BLANK]
Page 28
BURLINGTON COAT FACTORY WAREHOUSE CORPORATION
AND SUBSIDIARIES
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
------------------------------------------
Page No.
Independent auditors' report 30
Consolidated balance sheets 31
June 29, 1996 and July 1, 1995
Consolidated statements of operations for the 32
fiscal years ended June 29, 1996, July 1,
1995 and July 2, 1994
Consolidated statements of stockholders' 33
equity for the fiscal years ended July 2,
1994, July 1, 1995 and June 29, 1996
Consolidated statements of cash flows for 34
the fiscal years ended June 29, 1996, July
1, 1995 and July 2, 1994
Notes to consolidated financial statements 36
Financial Statement Schedules
- Schedule II -- Valuation and Qualifying 50
Accounts
- Schedules I, III, IV and V are motted
because they are not applicable or
not required because the required
information is included in the
consolidated financial statements
or notes thereto.
Page 29
INDEPENDENT AUDITORS' REPORT
- ----------------------------
Board of Directors and Stockholders
Burlington Coat Factory Warehouse Corporation
Burlington, New Jersey
We have audited the accompanying consolidated balance sheets of Burlington
Coat Factory Warehouse Corporation and its subsidiaries as of June 29, 1996 and
July 1, 1995, and the related consolidated statements of operations,
stockholders' equity, and cash flows for each of the three fiscal years in the
period ended June 29, 1996. Our audits also included the financial statement
schedule listed in the Index at Item 14(a)(2). These financial statements and
financial statement schedule are the responsibility of the Company's
management. Our responsibility is to express an opinion on the financial
statements and financial statement schedule based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe our audits provide a reasonable basis for
our opinion.
In our opinion, such consolidated financial statements present fairly, in all
material respects, the financial position of Burlington Coat Factory Warehouse
Corporation and subsidiaries at June 29, 1996 and July 1, 1995, and the results
of their operations and their cash flows for each of the three fiscal years in
the period ended June 29, 1996 in conformity with generally accepted accounting
principles. Also, in our opinion, such financial statement 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.
DELOITTE & TOUCHE LLP
Philadelphia, Pennsylvania
September 13, 1996
Page 30
BURLINGTON COAT FACTORY WAREHOUSE CORPORATION
AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(All amounts in thousands except share data)
June 29, July 01,
1996 1995
ASSETS
- ------
Current Assets:
Cash and Cash Equivalents $73,560 $ 14,520
Accounts Receivable (Net of Allowance for Doubtful
Accounts of 1996--$990 and 1995--$3,711) 15,003 15,326
Merchandise Inventories 370,437 452,026
Deferred Tax Asset 9,762 8,843
Prepaid and Other Current Assets 19,808 6,006
---------------------
Total Current Assets 488,570 496,721
Property and Equipment Net of Accumulated
Depreciation and Amortization 206,582 224,493
Other Assets 9,579 14,055
---------------------
Total Assets $704,731 $735,269
=====================
LIABILITIES AND STOCKHOLDERS' EQUITY
- ------------------------------------
Current Liabilities:
Accounts Payable $118,900 $101,046
Notes Payable -- 85,900
Income Taxes Payable 5,227 2,064
Accrued Insurance Costs 17,407 13,448
Other Current Liabilities 50,538 40,729
Current Maturities of Long-Term Debt 8,391 8,066
---------------------
Total Current Liabilities 200,463 251,253
Long-Term Debt 74,907 83,298
Other Liabilities 8,237 9,728
Deferred Tax Liability 7,379 5,971
Commitment and Contingencies
Stockholders' Equity:
Preferred Stock, Par Value $1; Authorized
5,000,000 shares; none issued and outstanding -- --
Common Stock, Par Value $1; Authorized 100,000,000 shares;
41,164,848 shares issued and outstanding at June 29, 1996
41,139,459 shares issued and outstanding at July 1, 1995 41,165 41,139
Capital in Excess of Par Value 25,384 25,143
Retained Earnings 349,608 320,595
Unrealized Loss-Marketable Securities -- (8)
Unearned Compensation (87) --
Treasury Stock at Cost; 1996--468,987 Shares (2,325) (1,850)
1995--427,387 Shares
Total Stockholders Equity 413,745 385,019
----------------------
Total Liabilities and Stockholders' Equity $704,731 $735,269
======================
See notes to consolidated financial statements
Page 31
BURLINGTON COAT FACTORY WAREHOUSE CORPORATION
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(All amounts in thousands except share data)
Year Ended
------------------------------------
June 29, July 01, July 02,
1996 1995 1994
------------------------------------
REVENUES:
Net Sales $1,591,964 $1,584,942 $1,468,440
Other Income 18,928 12,086 12,236
------------------------------------
1,610,892 1,597,028 1,480,676
------------------------------------
COSTS AND EXPENSES:
Cost of Sales (Exclusive of
Depreciation and Amortization) 1,040,388 1,060,212 956,818
Selling and Administrative Expenses 479,852 471,947 420,046
Depreciation and Amortization 29,913 26,327 21,528
Interest Expense 11,735 13,602 9,873
-----------------------------------
1,561,888 1,572,088 1,408,265
-----------------------------------
Income Before Provision for
Income Taxes 49,004 24,940 72,411
Provision for Income Taxes 19,991 10,074 27,028
-----------------------------------
Net Income $29,013 $14,866 $ 45,383
===================================
Net Income Per Share $ 0.71 $ 0.37 $ 1.12
=======================================
Weighted Average Shares Outstanding 40,730,516 40,710,683 40,632,201
=======================================
Dividends Per Share -- --
=======================================
See notes to consolidated financial statements
Page 32
BURLINGTON COAT FACTORY WAREHOUSE CORPORATION
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
YEARS ENDED JULY 02, 1994, JULY 01, 1995 AND JUNE 29, 1996
(All amounts in thousands)
Capital in Valuation
Common Excess of Retained Treasury Unearned Allowance
Stock Par Value Earnings Stock Compensation Total
--------------------------------------------------------------------------
Balance at July 03, 1993 $ 41,028 $ 23,598 $ 260,346 ($1,850) -- ($11) $323,111
Net Income 45,383 45,383
Stock Options Exercised 81 1,007 1,088
Net Unrealized Loss on
Noncurrent Marketable
Securities (9) (9)
Equity Adjustment for
Translation 284 284
Stock Split Adjustment 13 (13) 0
--------------------------------------------------------------------------
Balance at July 02, 1994 41,122 24,592 305,729 (1,850) 264 369,857
Net Income 14,866 14,866
Stock Options Exercised 17 551 568
Net Unrealized Gain on
Noncurrent Marketable
Securities 12 12
Equity Adjustment for
Translation (284) (284)
__________________________________________________________________________
Balance at July 01, 1995 41,139 25,143 320,595 (1,850) (8) 385,019
Net Income 29,013 29,013
Stock Options Exercised 16 142 158
Net Unrealized Gain on
Noncurrent Marketable
Securities 8 8
Unearned Compensation 10 99 (87) 22
Treasury Stock Transactions (475) (475)
___________________________________________________________________________
Balance at June 29, 1996 $41,165 $25,384 $349,608 ($2,325) ($87) -- $413,745
===========================================================================
See notes to consolidated financial statements
Page 33
BURLINGTON COAT FACTORY WAREHOUSE CORPORATION
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(All amounts in thousands)
Year Ended
--------------------------------
June 29, July 01, July 02,
1996 1995 1994
--------------------------------
OPERATING ACTIVITIES
Net Income $29,013 $ 14,866 $ 45,383
Adjustments to Reconcile Net Income to Net Cash
Provided by (Used in) Operating Activities:
Depreciation and Amortization 29,913 26,327 21,528
Provision for Losses on Accounts Receivable 6,068 5,162 4,821
Provision for Deferred Income Taxes 489 (2,920) (826)
(Gain)Loss on Disposition of Fixed Assets (100) 536 203
Non-Cash Rent Expense and Other 1,438 1,521 1,527
Changes in Operating Assets and Liabilities:
Accounts Receivable (5,965) (3,032) (8,674)
Merchandise Inventories 81,589 16,895 (116,002)
Prepaids and Other Current Assets (13,876) 11,962 (1,327)
Accounts Payable 17,854 (32,660) 17,499
Accrued and other Current Liabilities 16,931 4,389 7,525
-----------------------------------
Net Cash Provided by (Used in)
Operating Activities 163,354 43,046 (28,343)
-----------------------------------
INVESTING ACTIVITIES
Acquisition of Property and Equipment (29,340) (66,900) (63,686)
Short-Term Investments-Net -- -- 16,421
Proceeds From Sale of Fixed Assets 17,839 27 17
Issuance of Long-Term Notes Receivable (516) (5,202) (3,668)
Receipts Against Long-Term Notes Receivable 4,539 1,611 609
Acquisition of Leasehold -- (2,652) (2,050)
Minority Interest (62) (66) 497
Other (2,485) 2,031 568
-----------------------------------
Net Cash (Used in) Investing Activities (10,031) (71,151) (51,292)
-----------------------------------
FINANCING ACTIVITIES
Principal Payments on Long-Term Debt (8,066) (59) (118)
Issuance of Common Stock Upon Exercise of
Stock Options 158 568 1,088
Purchase of Treasury Stock (475) -- --
Net (Payments) Borrowings Under
Lines of Credit (85,900) 20,880 65,020
------------------------------------
Net Cash (Used in) Provided by
Financing Activities (94,283) 21,389 65,990
------------------------------------
Increase (Decrease) in Cash and
Cash Equivalents 59,040 (6,716) (13,645)
Cash and Cash Equivalents at
Beginning of Period 14,520 21,236 34,881
-----------------------------------
Cash and Cash Equivalents at
End of Period $73,560 $ 14,520 $ 21,236
====================================
Interest Paid $12,062 $ 13,490 $ 9,873
====================================
Income Taxes Paid $16,339 $ 10,900 $ 32,414
====================================
See notes to consolidated financial statements
Page 34
BURLINGTON COAT FACTORY WAREHOUSE CORPORATION
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
Supplemental Schedule of Non-Cash Financing and Investing Activities:
The Company wrote off certain fixed assets with a book value of $.2
million, $.5 million and $1.8 million for the fiscal years 1994, 1995
and 1996, respectively.
During fiscal 1996, the Company granted a restricted stock award of
10,000 shares of its common stock to an officer of the Company with a fair
market value of $108,800 as of the award's measurement date. This award vests
over a four year period from the date of grant.
See notes to consolidated financial statements.
Page 35
Notes to Consolidated Financial Statements
- ----------------------------------------------------------------------------
A. Summary of Significant Accounting Policies
1. Business
Burlington Coat Factory Warehouse Corporation operates 244 stores, in 41
states, which sell "off-price" apparel for men, women and children. A
majority of those stores offer a home linens department and a baby room
furniture department. The Company operates stores under the names
"Burlington Coat Factory Warehouse" (two hundred eighteen stores),
"Cohoes Fashions" (five stores), "Decelle" (eight stores), "Luxury Linens"
(seven stores), "Totally 4 Kids" (four stores), "Fit For Men" (one store),
and "Baby Depot" (one store). Cohoes Fashions offers merchandise in
the middle to higher price range. Decelle offers merchandise in the
moderate price range for the entire family with an emphasis on
children's and youth wear. Luxury Linens is a specialty store for
linens, bath shop item, gifts and accessories and offers merchandise
in the middle to higher range. Totally 4 Kids is a moderate to
upscale concept store offering maternity wear, baby furniture,
children's wear from toddlers up to teens, childrens's books, toys,
computer software for kids and educational tapes in a family
environment. Fit For Men is a stand alone mens store specializing
in special size menswear. Baby Depot is a stand alone infant and
toddler store specializing in infant and toddler apparel, furnishings
and accessories.
2. Principles of Consolidation
The consolidated financial statements include the accounts of
Burlington Coat Factory Warehouse Corporation and its subsidiaries
(the "Company"). All intercompany transactions and balances have been
eliminated in consolidation.
3. Use of Estimates
The Company's consolidated financial statemens have been prepared in
conformity with generally accepted accounting principals. Certain
amounts included in the consolidated financial statements are estimated
based on currently available information and management's judgment as to
the outcome of future conditions and circumstances. While every effort
is made to ensure the integrity of such estimates, including the use of
third party specialists where appropriate, actual result could differ
from these estimates.
4. Inventories
Inventories are stated at the lower of the First In First Out (FIFO)
cost or market, as determined by the retail inventory method.
5. Property and Equipment
Property and equipment are stated at cost and depreciation is computed
on the straight line method over the estimated useful lives of the
assets. The estimated useful lives are between 20 and 40 years for
Page 36
buildings, depending upon the expected useful life of the facility,
and three to ten years for store fixtures and equipment. Leasehold
improvements are amortized over a ten year period. Repairs and
maintenance expenditures are charged to expense as incurred. Renewals
and betterments which significantly extend the useful lives of
existing property and equipment are capitalized.
6. Store Opening Expenses
Expenses related to new store openings are charged to operations in
the period incurred.
7. Income Taxes
The Company accounts for income taxes in accordance with Statement
of Financial Accounting Standards No. 109, "Accounting for Income Taxes".
Deferred income taxes have been recorded to recognize temporary differences
which result from revenues and expenses being recognized in different
periods for financial reporting purposes than for income tax purposes.
8. Net Income per Share
Net income per share is based on the weighted average number of shares
outstanding during each period. The dilutive effect of stock options
is not material.
9. Cash and Cash Equivalents
Cash and cash equivalents represent cash and short-term, highly liquid
investments with maturities of three months or less at the time of
purchase. Cash equivalent investments amounted to $58.9 million at
June 29, 1996 and $.8 million at July 1, 1995.
10. Fiscal Year End Date
The Company's fiscal year is a 52-53 week year with its year ending on
the Saturday closest to June 30th of each year. Fiscal 1996,
fiscal 1995 and fiscal 1994 ended June 29, 1996, July 1, 1995 and
July 2, 1994, respectively, and comprised 52 weeks each.
11. Other Income
Other income is primarily rental income received from leased
departments and interest income. In addition, the Company realized
approximately $4.0 million in non-recurring income from a settlement
of a contractual obligation during fiscal 1996.
12. Reclassifications
Certain reclassifications have been made to the prior years' financial
statements to conform to the classifications used in the current
year.
13. Recent Accounting Pronouncements
a. In March 1995, the Financial Accounting Standards Board ("FASB")
issued Statement of Financial Accounting Standards ("SFAS") No. 121,
Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Page 37
Assets to Be Disposed Of, which will be adopted by the Company in fiscal
year 1997 as required by this statement. This statement requires that
long-lived assets and certain identifiable intangibles to be held and
used by an entity be reviewed for impairment whenever events or changes in
circumstances indicate that the carrying amount of an
asset may not be recoverable. Also, in general, long-lived
assets and certain intangibles to be disposed of should be
reported at the lower of carrying amount or fair value less cost
to sell. Management has not yet determined what impact, if any,
adoption of this Statement will have on the Company's financial
statements.
b. In October 1995, the Financial Accounting Standards Board
issued Statement of Financial Accounting Standards No. 123,
Accounting for Stock-Based Compensation, which is
effective for the Company beginning June 30, 1996. SFAS No. 123
requires expanded disclosures of stock-based compensation
arrangements with employees and encourages (but does not require)
compensation expense to be measured based on the fair value of
the equity instrument awarded. Companies are permitted, however,
to continue to apply Accounting Principals Board Option No. 25
(APB No. 25), which recognizes compensation costs based on the
intrinsic value of the equity instrument awarded. The Company
will continue to apply APB No. 25 to its stock-based compensation
awards to employees and will disclose the required pro-forma
effects on net income and earnings per share as required by SFAS
No. 123.
B. Stock Splits
On September 13, 1993, the Board of Directors declared a three-for-two
split of the Company's common stock effective October 4, 1993, to
stockholders of record on September 24, 1993. This stock split was
effected in the form of a 50% stock dividend by the distribution of one
additional share for every two shares of stock already issued. The par
value of the common stock remained at $1.00 per share. As a result,
$13.68 million, representing the total par value of the new shares issued,
were transferred from the capital in excess of par value account to common
stock. Common stock and paid in capital in excess of par value accounts
as of July 3, 1993 were adjusted to give effect to the stock split. All
amounts per share were adjusted to give retroactive effect to the stock
split.
Page 38
C. Property and Equipment
Property and equipment consists of:
- -----------------------------------------------------------------------------
June 29, July 1,
1996 1995
(in thousands)
- -----------------------------------------------------------------------------
Land $ 18,345 $ 21,181
Buildings 66,926 81,191
Store Fixtures and Equipment 180,862 188,072
Leasehold Improvements 65,683 60,546
Construction in Progress 146 ---
- -----------------------------------------------------------------------------
$331,962 350,990
- -----------------------------------------------------------------------------
Less Accumulated Depreciation
and Amortization (125,380) (126,497)
- -----------------------------------------------------------------------------
$206,582 $224,493
- -----------------------------------------------------------------------------
D. Accounts Payable
Accounts payable consists of the following:
- ------------------------------------------------------------------------------
June 29, July 1,
1996 1995
(in thousands)
- ------------------------------------------------------------------------------
Accounts Payable-Trade $ 98,441 $ 76,571
Accounts Payable-Due Banks 10,247 7,641
Other 10,212 16,834
- ------------------------------------------------------------------------------
$118,900 $101,046
- ------------------------------------------------------------------------------
E. Lines of Credit
The Company had committed lines of credit of $50.0 million and $40.0 million
at June 29, 1996 and July 1, 1995, respectively. The Company also had
uncommitted lines of credit of $150.0 million and $160.0 million at June 29,
1996 and July 1, 1995, respectively. As of June 29, 1996 all borrowings under
these agreements had been repaid. Short-term borrowings outstanding under these
committed and uncommitted lines at July 1, 1995 were $85.9 million. Letters
of credit outstanding against these lines were $38.6 million and $36.9
million at June 29, 1996 and July 1, 1995, respectively.
The maximum borrowings outstanding under these lines were $120.4 million and
$147.4 million during fiscal 1996 and fiscal 1995, respectively. The
average borrowings outstanding under these lines were $38.7 million during
fiscal 1996 and $69.1 million during fiscal 1995.
Page 39
The weighted average interest rate on outstanding borrowings during fiscal
1996 was 6.3%. The weighted average interest rate on outstanding
borrowings during fiscal 1995 was 5.7%.
Short-term borrowings against these lines of credit bear interest at or
below the lending bank's prime rate. The $50 million committed line of
credit requires a commitment fee on the unused portion of 1/4 of 1
percent.
The Company's committed line of credit renews annually and is available
through 1998. The uncommitted lines of credit are cancellable at any
time.
F. Long-Term Debt
Long-term debt consists of:
- -------------------------------------------------------------------------------
June 29, July 1,
1996 1995
(in thousands)
- -------------------------------------------------------------------------------
Subordinated Notes, 10.6%, due in
annual $8 million payments from
June 1996 to June 2005 $ 72,000 $ 80,000
Industrial Revenue Bonds, 5.84%,
due in semi-annual payments of
various amounts from September 1,
1996 to September 1, 2010 10,000 10,000
Urban Development Action Grant, non-
interest bearing, due April 1999 917 917
Promissory note, due at various dates
through 2000 (interest rate
imputed at 10.6%) 381 447
- -------------------------------------------------------------------------------
Subtotal 83,298 91,364
Less current portion (8,391) (8,066)
- -------------------------------------------------------------------------------
Long-Term Debt $ 74,907 $83,298
- -------------------------------------------------------------------------------
The Industrial Revenue Bonds and Urban Development Action Grant were
issued in connection with the construction of the Company's distribution
center. The Bonds are secured by a first mortgage on the Company's
distribution center. The Urban Development Action Grant was secured by a
second mortgage on the facility.
On September 1, 1995 the Company called the Industrial Revenue Bonds at
103 and simultaneously refinanced these bonds with fixed rate bonds with
an average interest rate of 5.84%. The new Industrial Revenue Bonds have
the same maturity schedule as the original bonds and are also secured by a
first mortgage on the Company's home office and distribution center. The
Page 40
average interest rate before the refinancing was 9.78%. Indebtedness totalling
$10.9 million are secured by land and buildings with a net book value of
$19.8 million at June 29, 1996.
Long-term debt maturing in each of the next five fiscal years is as
follows: 1997 - $8.4 million; 1998 - $8.4 million; 1999 - $9.4 million;
2000 - $8.5 million; and 2001 - $8.5 million.
Several loan agreements of the Company contain restrictions which, among
other things, require maintenance of certain financial ratios, restrict
encumbrance of assets and creation of indebtedness, and limit the payment
of dividends. At June 29, 1996, $190.6 million of the Company's retained
earnings of $349.6 million were unrestricted and available for the payment
of dividends under the most restrictive terms of the agreements.
G. Sales from Leased Departments
Retail sales from certain leased departments, included in net sales,
amounted to $34.9 million, $27.4 million and $18.8 million in fiscal 1996,
fiscal 1995 and fiscal 1994, respectively.
H. Lease Commitments
The Company leases 228 stores and office spaces under operating leases
that will expire principally during the next twenty years. The leases
typically include renewal options and escalation clauses and provide for
contingent rentals based on a percentage of gross sales.
The following is a schedule of future minimum lease payments under the
operating leases:
- ------------------------------------------------------------------
(in thousands)
Fiscal Year
__________________________________________________________________
1997 $ 60,664
1998 58,332
1999 54,938
2000 49,124
2001 45,273
Thereafter 314,125
- ------------------------------------------------------------------
Total minimum lease payments $ 582,456
- ------------------------------------------------------------------
The above schedule of future minimum lease payments has not been reduced
by future minimum sublease rental income of $4.6 million under non-
cancelable subleases and other contingent rental agreements.
Total rental expenses under operating leases for the periods ended on June 29,
1996, July 1, 1995 and July 2, 1994 were $62.7 million, $57.1 million and
$47.3 million, respectively, including contingent rentals of $1.8
Page 41
million, $2.5 million, and $1.5 million, respectively. Rent expense for the
above periods has not been reduced by sublease rental income of $5.7 million,
$6.1 million, and $4.9 million which has been included in other income for
the periods ended June 29, 1996, July 1, 1995 and July 2, 1994, respectively.
The Company has irrevocable letters of credit in the amount of $15.6
million to guarantee payment and performance under certain leases, insurance
contracts and utility agreements.
I. Employee Retirement Plans
The Company has a noncontributory profit-sharing plan covering employees
who meet age and service requirements. Effective September 1, 1995, the
Company amended and restated the plan to provide additional retirement
security to particpants by adding a cash or deferred (salary deferral)
feature qualifying under Section 401(k) of the Internal Revenue Code.
Membership in the salary deferral feature is voluntary. Employees may,
up to certain prescribed limits, contribute to the 401(k) Plan and a
portion of these contributions are matched by the Company. In addition,
under the profit sharing feature, the Company's contribution to the plan is
determined annually by the Board of Directors. The provision for Company
profit sharing and 401(k) contributions was $5.0 million for fiscal
1996. The provision for profit sharing contibutions were $.9 million and
$4.2 million, respectively, for the periods ended July 1, 1995 and July 2,
1994.
J. Income Taxes
The provision for income taxes is summarized as follows:
- ----------------------------------------------------------------------
Year ended 1996 1995 1994
(in thousands)
- ----------------------------------------------------------------------
Current:
Federal $17,112 $10,737 $24,779
State and Local 2,390 2,257 3,075
- ----------------------------------------------------------------------
Subtotal 19,502 12,994 27,854
Deferred 489 (2,920) (826)
- ----------------------------------------------------------------------
Total $19,991 $10,074 $27,028
- ----------------------------------------------------------------------
A reconciliation of the Company's effective tax rate with the statutory
federal tax rate is as follows:
Page 42
______________________________________________________________________
Year ended 1996 1995 1994
______________________________________________________________________
Tax at statutory rate 35.0% 35.0% 35.0%
State income taxes, net
of federal benefit 3.9 4.7 2.8
Job tax credit -- (.3) (.9)
Other charges 1.9 1.0 .4
- ----------------------------------------------------------------------
Effective tax rate 40.8% 40.4% 37.3%
______________________________________________________________________
Deferred income taxes for 1996, 1995 and 1994 reflect the impact of
"temporary differences" between amounts of assets and liabilities for
financial reporting purposes and such amounts as measured by tax laws. These
temporary differences are determined in accordance with SFAS No. 109.
On August 10, 1993 the Omnibus Budget Reconciliation Act was enacted which
increased federal tax rates from 34% to 35%. The effect on current and
deferred taxes of this change in tax rates was not significant and was
recognized in income during fiscal 1994.
Temporary differences which give rise to deferred tax assets and
liabilities at June 29, 1996 and July 1, 1995 are as follows:
- --------------------------------------------------------------------------------
Year Ended 1996 1995
Deferred Deferred Deferred Deferred
Tax Tax Tax Tax
Assets Liabilities Assets Liabilities
(in thousands)
- --------------------------------------------------------------------------------
Current:
Allowance for doubtful
accounts $ 399 $1,494
Compensated absences 692 657
Inventory costs
capitalized for tax
purposes 2,805 3,544
Insurance reserves 6,630 4,836
Prepaid items deductible
for tax purposes _____ $1,413 $2,117
Other 649 429
- ------------------------------------------------------------------------------
$11,175 $1,413 10,960 2,117
- -------------------------------------------------------------------------------
Non-Current:
Depreciation 11,111 9,706
Accounting for rent
expense 1,152 1,131
Pre-opening cost 2,615 35 2,414
Other 190
- -------------------------------------------------------------------------------
$ 3,767 $11,146 $3,735 $9,706
- -------------------------------------------------------------------------------
No valuation account is deemed necessary.
Page 43
K. Supplementary Income Statement Information
- -------------------------------------------------------------------------------
Year ended 1996 1995 1994
(in thousands)
- -------------------------------------------------------------------------------
Advertising $44,172 $42,345 $38,793
Repairs and Maintenance $16,631 $15,533 $13,330
- -------------------------------------------------------------------------------
All other required items are omitted since they are less than 1% of total
revenues.
L. Incentive Plans
In April 1983, the stockholders of the Company adopted a Stock Option and
Stock Appreciation Rights Plan (the "1983 Plan") which authorized the
granting of options for the issuance of 1,125,000 shares of common stock.
During 1988 the stockholders authorized the issuance of an additional
675,000 shares of common stock for a total of 1,800,000 shares under this
Plan. The 1983 Plan provided for the issuance of incentive stock options,
nonqualified stock options and stock appreciation rights. This plan
expired in April, 1993. In November, 1993, the stockholders of the
Company approved a stock incentive plan (the "1993 Plan"), authorizing the
granting of incentive stock options, non-qualified stock options, stock
appreciation rights, restricted stock, performance stock and other stock
based compensation. A total of 450,000 shares of common stock have been
reserved for issuance under the 1993 Plan. A summary of stock options
transactions in fiscal 1994, 1995 and 1996 is as follows (all data have
been restated to reflect the three-for-two stock split):
Page 44
- ------------------------------------------------------------------
Number Option Price
of Shares Per Share
- ------------------------------------------------------------------
- ------------------------------------------------------------------
Options outstanding
July 3, 1993 . . . . . 379,401 $ 4.48 to $ 8.30
Options issued . . . . . 25,100 $24.69
Options cancelled . . . . . (5,445) $ 4.74 to $ 7.37
Options exercised . . . . . (81,011) $ 4.74 to $ 7.37
- ------------------------------------------------------------------
Options outstanding
July 2, 1994 . . . . . 318,045 $ 4.74 to $24.69
Options issued . . . . . 38,200 $11.50
Options cancelled . . . . . (5,290) $ 4.74 to $ 7.37
Options exercised . . . . . (16,404) $ 4.74 to $ 7.37
- ------------------------------------------------------------------
Options outstanding
July 1, 1995 . . . . . 334,551 $ 4.74 to $24.69
Options issued . . . . . 38,900 $11.38
Options cancelled . . . . . (6,525) $ 4.74 to $ 7.37
Options exercised . . . . . (15,456) $ 4.74 to $ 7.37
- ------------------------------------------------------------------
Options outstanding
June 29, 1996 . . . . . 351,470 $ 4.74 to $24.69
Options exercisable. . . . . 312,570 $ 4.74 to $24.69
- ------------------------------------------------------------------
Included in the above are options to purchase 2,250 shares of stock issued
to a member of the Board of Directors at $8.22 per share which were
exercised during the year ended July 2, 1994.
During the fiscal year ended June 29, 1996, a restricted stock award of 10,000
shares of the Company's common stock was made to an officer of the company.
The fair market value on the date of the award was $108,800. The shares become
vested to the officer over a four year period based on certain employment
criteria. The unearned compensation related to this award is being amortized
over the vesting period.
Page 45
M. Interim Financial Information (Unaudited)
(All amounts in thousands except per share data.)
- --------------------------------------------------------------------------------
Net Income
Provision (Loss)
(Benefit) Net per
Net Gross for Income Income Share
Sales Profit Taxes (Loss) (1)
- -------------------------------------------------------------------------------
1996:
First $291,227 $ 97,086 ($7,761) ($11,161) $(.27)
Second 658,631 233,760 33,769 48,784 1.20
Third 323,234 108,070 (3,089) (4,567) (.11)
Fourth 318,872 112,660 (2,928) (4,043) (.10)
- -------------------------------------------------------------------------------
1995:
First $299,242 $105,875 ($4,675) ($7,526) $(.18)
Second 656,492 218,309 26,442 43,115 1.06
Third 324,457 107,901 (5,144) (9,029) (.22)
Fourth 304,751 92,645 (6,549) (11,694) (.29)
- -------------------------------------------------------------------------------
(1) Net income per share is based on the weighted average number of shares
outstanding during each of the quarters. The sum of the four quarters may
not equal the full year computation due to rounding.
On an interim basis the Company values inventory using the gross profit
method and at year-end values inventory at the lower of FIFO cost or
market as determined by the retail inventory method. The annual
adjustment for the difference between actual gross profit and interim
estimated gross profit is recorded in the fourth quarter of the fiscal
year. Results of quarterly operations are impacted by the highly seasonal
nature of the Company's business, timing of certain holiday selling
seasons and the comparability of calendar weeks within a quarter as a
result of the 52/53 week fiscal years.
N. Fair Value of Financial Instruments
The carrying values of cash and cash equivalents, short-term investments,
accounts receivable and accounts payable approximate fair value because of
the short maturities of these items.
Interest rates that are currently available to the Company for issuance of
notes payable and long-term debt (including current maturities) with
similar terms and remaining maturities are used to estimate fair value for
debt issues. The estimated fair value of notes payable and long-term debt
(including current maturities) are as follows:
Page 46
_____________________________________________________________________________
June 29, July 1,
1996 1995
Carrying Fair Carrying Fair
Amount Value Amount Value
(in thousands)
- -----------------------------------------------------------------------------
Notes Payable -- -- $85,900 $85,900
Long-Term Debt
(including current maturities) $83,298 $83,556 $91,364 $92,930
- -----------------------------------------------------------------------------
The fair values presented herein are based on pertinent information
available to management as of the respective year ends. Although
management is not aware of any factors that could significantly affect the
estimated fair value amounts, such amounts have not been comprehensively
revalued for purposes of these financial statements since that date, and
current estimates of fair value may differ from amounts presented herein.
O. Legal Matters
In late September, 1994, the Company received summons and complaint in
three separate purported class action lawsuits. Each of the complaints
was consolidated into a single amended complaint which sought unspecified
damages and alleged a cause of action arising under certain federal
securities laws for alleged material misstatements and omissions in public
statements by the Company and five executive officers purportedly causing
the market price of the Company's common stock to be artificially inflated
during the period October 4, 1993 through September 23, 1994, inclusive.
On February 20, 1996, the District Court dismissed the plaintiff's amended
complaint in its entirety. In March, 1996, plaintiffs filed an appeal from
the District Court's decision in the United States Court of Appeals for the
Third Circuit. The Company is unable to determine the probability of any
potential loss with respect to these class actions or the materiality
thereof at this time and accordingly has not established any reserve for this
matter in the accompanying consolidated financial statements.
Page 47
Dividend Policy
The Company has not paid cash dividends in the past and does not currently
plan to do so. It is the present policy of the Company's Board of
Directors to retain future earnings to finance the growth and development
of the Company's business. Any payment of cash dividends in the future
will be at the discretion of the Company's Board of Directors and will
depend upon the financial condition, capital requirements and earnings of
the Company as well as other factors which the Board of Directors may deem
relevant. At June 29, 1996, $190.6 million of the Company's retained earnings
were unrestricted and available for the payment of cash dividends.
Market for the Registrant's Common Equity and Related Stockholder Matters
The Company's Common Stock is traded on the New York Stock Exchange, Inc.
and its trading symbol is "BCF." The following table provides the high
and low closing prices on the New York Stock Exchange for each fiscal
quarter for the period from July 3, 1994 to June 29, 1996 and for the two
months ended August 31, 1996:
- -----------------------------------------------------------------
Period Low Price High Price
- ----------------------------------------------------------------
- -----------------------------------------------------------------
July 3, 1994 to 12 2/3 24 3/4
October 1, 1994
- -----------------------------------------------------------------
October 2, 1994 to 10 1/4 14 1/8
December 31, 1994
- -----------------------------------------------------------------
January 1, 1995 to 8 1/2 11 7/8
April 1, 1995
- -----------------------------------------------------------------
April 2, 1995 to 9 7/8 11 1/4
July 1, 1995
- -----------------------------------------------------------------
July 2, 1995 to 10 14 1/8
September 30, 1995
- -----------------------------------------------------------------
October 1, 1995 to 10 1/4 13 1/4
December 30, 1995
- -----------------------------------------------------------------
December 31, 1995 to 9 3/8 12 1/4
March 30, 1996
- -----------------------------------------------------------------
March 31, 1996 to 10 1/8 12 1/8
June 29, 1996
- -----------------------------------------------------------------
June 30, 1996 to 10 11 1/8
August 31, 1996
- -----------------------------------------------------------------
Page 48
As of August 31, 1996, there were 547 record holders of the Company's
Common Stock. The number of record holders does not reflect that number
of beneficial owners of the Company's Common Stock for whom shares are
held by Cede & Co., certain brokerage firms and others.
Page 49
BURLINGTON COAT FACTORY WAREHOUSE CORPORATION
Schedule II - Valuation and Qualifying Accounts
(All amounts in thousands)
- -------------------------------------------------------------------------------
COL. A COL. B COL. C COL. D COL. E.
- -------------------------------------------------------------------------------
DESCRIPTION BALANCE AT CHARGED TO BALANCE AT
BEGINNING CHARGED TO OTHER ACCOUNTS END OF
OF PERIOD EXPENSE ACCOUNTS WRITTEN OFF PERIOD
- -------------------------------------------------------------------------------
Period ended 6/29/96
ALLOWANCE FOR DOUBTFUL
ACCOUNTS-
ACCOUNTS RECEIVABLE $3,711 $6,068 $0 $(8,789) $ 990
---------------------------------------------------------
Period ended 7/01/95
ALLOWANCE FOR DOUBTFUL
ACCOUNTS-
ACCOUNTS RECEIVABLE $4,995 $5,162 $0 $(6,446) $3,711
---------------------------------------------------------
Period ended 7/02/94
ALLOWANCE FOR DOUBTFUL
ACCOUNTS-
ACCOUNTS RECEIVABLE $4,237 $4,821 $0 $(4,063) $4,995
---------------------------------------------------------
Page 50
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Page 51
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Page 52
File No. 1-8739
=============================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
EXHIBITS FILED WITH
FORM 10-K
FOR FISCAL YEAR ENDED
June 29, 1996
under
The Securities Exchange Act of 1934
BURLINGTON COAT FACTORY WAREHOUSE CORPORATION
(Exact Name of Registrant as specified in its Charter)
- ------------------------------------------------------------------------------
Page 53
INDEX TO EXHIBITS
Exhibits Page No.
3.1 Articles of Incorporation, as Amended 2/
3.2 By-laws 2/
10.1 1993 Stock Incentive Plan 2/
10.2 Revolving Credit Agreement dated 56
August 30, 1985 between the Company
and BancOhio National Bank as amended
through Amendment No. 6
10.3 Burlington Coat Factory Warehouse 154
Corporation 401(k) Profit-Sharing
Plan (as amended and restated effective
July 1, 1989)
10.4 Loan Agreement dated as of 1/
August 1, 1995 by and between
New Jersey Economic Development
Authority and Burlington Coat Factory
Warehouse of New Jersey, Inc.
10.5 Assignment of Leases dated as of 1/
August 1, 1995 from Burlington
Coat Factory Warehouse of New
Jersey, Inc. to First Fidelity Bank,
National Association
10.6 Mortgage and Security Agreement dated 1/
as of August 1, 1995 between Burlington
Coat Factory Warehouse of New Jersey,
Inc. and First Fidelity Bank, National
Association
_______________
[FN]
(1) Incorporated by reference to Exhibits filed with the Company's Annual
Report on Form 10-K for the year ended July 1, 1995, File No. 1-8739.
(2) Incorporated by reference to Exhibits filed with the Company's Annual
Report on Form 10-K for the year ended July 3, 1993, File No. 1-8739.
[/FN]
Page 54
Exhibits Page No.
- -------- --------
10.7 Indenture of Trust dated as of 1/
August 1, 1995 by and between
New Jersey Economic Development
Authority and Shawmut Bank
Connecticut, National Association
10.8 Guaranty and Suretyship Agreement dated 1/
as of August 1, 1995 from the Company
to First Fidelity Bank, National
Association
10.9 Letter of Credit Reimbursement Agreement 1/
dated as of August 1, 1995 between
Burlington Coat Factory Warehouse of
New Jersey, Inc. and First Fidelity
Bank, National Association
10.10 Environmental Indemnity Agreement dated 1/
as of August 1, 1995 between Burlington
Coat Factory Warehouse of New Jersey,
Inc. and First Fidelity Bank, National
Association
10.11 Note Agreement dated June 27, 1990 1/
21 Subsidiaries of Registrant 199
23 Consent of Deloitte & Touche LLP 201
independent certified public accountants,
to the use of their report on the financial
statements of the Company for the fiscal
year ended June 29, 1996 in the Registration
Statements of the Company on Form S-8,
Registration No. 2-96332, No. 33-21569,
No. 33-51965 and No. 33-61351
27 Financial Data Schedule 203
Page 55