UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
- ---
For the quarterly period ended May 31, 1998 or
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
- ---
For the transition period from to .
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Commission file number #1-8484 .
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Heilig-Meyers Company .
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(Exact name of registrant as specified in its charter)
Virginia 54-0558861
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
12560 West Creek Parkway, Richmond, Virginia 23238 .
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(Address of principal executive offices) (Zip Code)
(804) 784-7300 .
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(Registrant's telephone number, including area code)
.
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(Former name, former address and former fiscal year, if changed since last
report.)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No .
-- --
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of July 1, 1998.
59,076,863 shares of Common Stock, $2.00 par value.
HEILIG-MEYERS COMPANY
INDEX
Page
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Statements of Earnings for
Three Months Ended May 31, 1998
and May 31, 1997 (Unaudited) 3
Consolidated Balance Sheets as of May 31, 1998
(Unaudited), and February 28, 1998 (Audited) 4
Consolidated Statements of Cash Flows for
Three Months Ended May 31, 1998 and
May 31, 1997 (Unaudited) 5
Notes to Consolidated Financial Statements (Unaudited) 6
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 10
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 15
Item 6. Exhibits and Reports on Form 8-K 16
2
PART I
ITEM 1. FINANCIAL STATEMENTS
HEILIG-MEYERS COMPANY
CONSOLIDATED STATEMENTS OF EARNINGS
(Amounts in thousands except per share data)
(Unaudited)
Three Months Ended
May 31 ,
-----------------------
1998 1997
---- ----
Revenues:
Sales $593,795 $489,040
Other income 75,144 77,285
-------- --------
Total revenues 668,939 566,325
-------- --------
Costs and Expenses:
Costs of sales 393,432 319,982
Selling, general and
administrative 217,296 185,987
Interest 19,140 15,428
Provision for doubtful
accounts 23,199 22,928
-------- --------
Total costs and expenses 653,067 544,325
-------- --------
Earnings before provision for
income taxes 15,872 22,000
Provision for income taxes 5,678 8,239
-------- --------
Net earnings $ 10,194 $ 13,761
======== ========
Net earnings per share of common stock:
Basic $0.17 $0.25
======== ========
Diluted 0.17 0.25
======== ========
Cash dividends per share of
common stock $0.07 $0.07
======== ========
See notes to consolidated financial statements.
3
HEILIG-MEYERS COMPANY
CONSOLIDATED BALANCE SHEETS
(Amounts in thousands except par value data)
May 31, February 28,
1998 1998
---- ----
(Unaudited) (Audited)
ASSETS
Current assets:
Cash $ 28,056 $ 48,779
Accounts receivable, net 389,055 392,765
Retained interest in securitized
receivables at fair value 193,078 182,158
Inventories 543,763 542,868
Other current assets 132,951 126,978
---------- ----------
Total current assets 1,286,903 1,293,548
Property and equipment, net 388,710 398,151
Other assets 64,733 55,321
Excess costs over net assets acquired, net 349,775 350,493
---------- ----------
$2,090,121 $2,097,513
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Notes payable $ 233,885 $ 260,000
Long-term debt due within
one year 152,240 22,365
Accounts payable 217,298 203,048
Accrued expenses 214,345 216,738
---------- ----------
Total current liabilities 817,768 702,151
---------- ----------
Long-term debt 584,709 715,271
Deferred income taxes 72,406 70,937
Stockholders' equity:
Preferred stock, $10 par value --- ---
Common stock, $2 par value (250,000
shares authorized; shares issued
58,812 and 58,808, respectively) 117,625 117,616
Capital in excess of par value 230,596 230,580
Unrealized gain on investments 4,548 4,548
Retained earnings 262,469 256,410
---------- ----------
Total stockholders' equity 615,238 609,154
---------- ----------
$2,090,121 $2,097,513
========== ==========
See notes to consolidated financial statements.
4
HEILIG-MEYERS COMPANY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts in thousands)
(Unaudited)
Three Months Ended
May 31,
-----------------------
1998 1997
---- ----
Cash flows from operating activities:
Net earnings $ 10,194 $ 13,761
Adjustments to reconcile net
earnings to net cash provided by
operating activities:
Depreciation and amortization 14,587 12,572
Provision for doubtful accounts 23,199 22,928
Store closing charge payments (3,411) -
Other, net (50) 116
Change in operating assets and
liabilities net of the effects
of acquisitions:
Accounts receivable (20,631) (51,300)
Retained interest in securitized
receivables at cost (10,920) -
Other receivables (6,113) 7,009
Inventories (3,377) (8,372)
Prepaid expenses (337) 917
Accounts payable 14,250 2,591
Accrued expenses 11,451 13,587
--------- --------
Net cash provided by
operating activities 28,842 13,809
--------- --------
Cash flows from investing activities:
Acquisitions, net of cash acquired - (2,961)
Additions to property and equipment (15,830) (38,864)
Disposals of property and equipment 7,562 2,174
Miscellaneous investments (10,385) (5,879)
--------- -------
Net cash used by investing
activities (18,653) (45,530)
--------- --------
Cash flows from financing activities:
Net (decrease) increase in notes payable (26,115) 51,700
Payments of long-term debt (687) (9,095)
Issuance of common stock 25 24
Dividends paid (4,135) (4,019)
--------- ---------
Net cash (used) provided
by financing activities (30,912) 38,610
--------- --------
Net (decrease) increase in cash (20,723) 6,889
Cash at beginning of period 48,779 14,959
--------- --------
Cash at end of period $ 28,056 $ 21,848
========= ========
See notes to consolidated financial statements.
5
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
A. The accompanying consolidated financial statements of Heilig- Meyers
Company (the Company) have not been audited by independent accountants,
except for the balance sheet at February 28, 1998. These financial
statements have been prepared in accordance with regulations of the
Securities and Exchange Commission in regard to quarterly (interim)
reporting. In the opinion of management, the financial information
presented reflects all adjustments, comprised only of normal recurring
accruals, which are necessary for a fair presentation of the results for
the interim periods. Significant accounting policies and accounting
principles have been consistently applied in both the interim and annual
consolidated financial statements. Certain notes and the related
information have been condensed or omitted from the interim financial
statements presented in this Quarterly Report on Form 10-Q. Therefore,
these financial statements should be read in conjunction with the Company's
1998 Annual Report on Form 10-K. The results for the first quarter of
fiscal year 1999 are not necessarily indicative of future financial
results.
B. On April 1, 1998, the Board of Directors declared a cash dividend of $0.07
per share which was paid on May 16, 1998, to stockholders of record on
April 22, 1998.
C. Accounts receivable are shown net of the allowance for doubtful accounts
and unearned finance income. The allowance for doubtful accounts was
$73,121,000 and $60,306,000 and unearned finance income was $45,169,000 and
$46,980,000 at May 31, 1998, and February 28, 1998, respectively.
D. The Company made income tax payments of $371,000 and $4,585,000 during the
three months ended May 31, 1998, and May 31, 1997, respectively.
E. The Company made interest payments of $12,677,000 and $9,342,000 during the
three months ended May 31, 1998, and May 31, 1997, respectively.
F. On July 1, 1997, the Company acquired all of the outstanding capital stock
of Mattress Discounters Corporation and a related corporation ("Mattress
Discounters"). The Company issued 2,269,839 shares of common stock and
placed 264,550 shares of common stock in escrow. The shares placed in
escrow have been released to the former shareholders of Mattress
Discounters as the acquired stores met certain earnings targets in the
twelve months following the acquisition.
G. Effective March 1, 1998, the Company adopted Statement of Financial
Accounting Standards ("SFAS") No. 130, "Reporting Comprehensive Income."
This statement requires that the Company report the total nonowner changes
in equity for all periods displayed. For the quarters ended May 31, 1998
and 1997, there were no such changes.
In February 1998 the Financial Accounting Standards Board ("FASB") issued
SFAS No. 132,"Employers Disclosures about Pensions and Other Postretirement
Benefits", which is effective for fiscal years beginning after December 15,
1997. The new statement will change disclosure requirements related to
pension and other postretirement benefit obligations. The new statement
will be implemented in fiscal 1999 and will not impact the Company's
consolidated financial position, results of operations or cash flows. The
effect of the new statement will be limited to the form and content of
disclosures.
6
In March 1998 the AICPA issued Statement of Position("SOP")98-1,"Accounting
for the Costs of Computer Software Developed or Obtained for Internal Use",
which is effective for fiscal years beginning after December 15, 1998. SOP
98-1 requires certain software development costs to be capitalized.
Generally, once the capitalization criteria of the SOP have been met,
external direct costs of materials and services used in development of
internal-use software, payroll and payroll related costs for employees
directly involved in the development of internal-use software, and interest
costs incurred when developing software for internal use are to be
capitalized. Management does not expect the adoption of the SOP to have a
material effect on the Company's consolidated financial position, results
of operations or cash flows.
In April 1998 the AICPA issued SOP 98-5,"Reporting on the Costs of Start-Up
Activities", which is effective for fiscal years beginning after December
15, 1998. SOP 98-5 requires costs of start-up activities and organization
costs to be expensed as incurred. Management does not expect the adoption
of the SOP to have a material effect on the Company's consolidated
financial position, results of operations or cash flows.
H. MacSaver Financial Services, Inc. ("MacSaver") is the Company's
wholly-owned subsidiary whose principal business activity is to obtain
financing for the operations of Heilig-Meyers and its other subsidiaries,
and, in connection therewith, MacSaver generally acquires and holds the
aggregate principal amount of installment credit accounts generated by the
Company's operating subsidiaries. The payment of principal and interest
associated with this debt is guaranteed by the Parent Company. The Company
has not presented separate financial statements and other disclosures
concerning MacSaver because management has determined that such information
is not material to the holders of the MacSaver debt securities guaranteed
by the Company. However, as required by the 1934 Act, the summarized
financial information concerning MacSaver is as follows:
7
MacSaver Financial Services, Inc.
Summarized Statements of Earnings
(Amounts in thousands)
(Unaudited)
Three Months Ended
May 31,
------------------
1998 1997
---- ----
Net revenues $ 70,895 $ 59,243
Operating expenses 55,564 54,050
-------- --------
Earnings before taxes 15,331 5,193
-------- --------
Net earnings 9,966 3,375
======== ========
MacSaver Financial Services, Inc.
Summarized Balance Sheets
(Amounts in thousands)
May 31, February 28,
1998 1998
---------- ----------
(Unaudited) (Audited)
Current assets $ 24,527 $ 29,545
Accounts receivable, net 326,649 295,405
Retained interest in securitized
receivables at fair value 193,078 182,158
Due from affiliates 600,113 645,291
---------- ----------
Total Assets $1,144,367 $1,152,399
========== ==========
Current liabilities 187,068 48,951
Notes payable 233,885 260,000
Long-term debt 570,000 700,000
Stockholder's equity 153,414 143,448
---------- ----------
Total Liabilities and Equity $1,144,367 $1,152,399
========== ==========
8
I. The following table sets forth the computations of basic and diluted
earnings per share:
Three Months Ended
May 31,
--------------
1998 1997
---- ----
(Amounts in thousands except per share data)
Numerator:
Net earnings $10,194 $13,761
Denominator:
Denominator for basic
earnings per share -
average common shares
outstanding 58,812 54,414
Effect of potentially
dilutive stock options 594 833
Effect of contingently issuable
shares considered earned 264 -
------ ------
Denominator for diluted
earnings per share 59,670 55,247
Basic EPS $ 0.17 $ 0.25
Diluted EPS 0.17 0.25
Options to purchase 2,990,000 and 2,457,000 shares of common stock at
prices ranging from $14.63 and $17.25 to $35.06 per share were
outstanding at May 31, 1998 and 1997, respectively, but were not
included in the computation of diluted earnings per share because they
would have been antidilutive.
J. In the fourth quarter of fiscal 1998, the Company recorded a pre-tax
charge of approximately $25,530,000 related to specific plans to close
approximately 40 Heilig-Meyers stores, downsize office and support
facilities, and reorganize the Heilig-Meyers private label credit card
program. The charge reduced 1998 net earnings $16,683,000 or $.30 per
share. Amounts charged to the provision during the first quarter of
fiscal 1999 are as follows:
Amount
Utilized Remaining
Reserve as through Reserve as
of March 1, May 31, of May 31,
(Amounts in thousands) 1998 1998 1998
---- ---- ----
Severance $ 6,648 $1,954 $ 4,694
Lease & facility exit cost 7,680 1,459 6,221
Fixed asset impairment 5,133 4,577 556
---------------------------------
Total $19,461 $7,990 $11,471
=================================
The Company expects to complete the store closings, office downsizing,
and private label credit card program reorganization within the current
fiscal year. Accordingly, the substantial majority of the reserves are
expected to be utilized during fiscal 1999. Amounts related to
long-term lease obligations may extend beyond fiscal 1999.
9
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
The following discussion should be read in conjunction with the
consolidated financial statements and notes to the consolidated financial
statements included in Item 1 of this document, and with the audited
consolidated financial statements of Heilig-Meyers Company (the "Company") and
notes thereto for the fiscal year ended February 28, 1998.
RESULTS OF OPERATIONS
Profit Improvement Plan
In December 1997, the Company announced a Profit Improvement Plan (the
"Profit Improvement Plan") that has three main components: (1) expense
reductions; (2) restructuring of certain aspects of the business; and (3)
Heilig-Meyers store operating initiatives.
In connection with this Profit Improvement Plan, the Company has
substantially completed its store closing plan, downsized administrative and
support facilities, begun the process of reorganizing the Heilig-Meyers private
label credit card program, and implemented programs to improve the overall
performance of the Heilig-Meyers stores. The Company expects to complete the
closing of stores targeted by the Profit Improvement Plan during the second
quarter of fiscal 1999 and to complete the reorganization of the private label
credit card program prior to the end of the third quarter.
Revenues and Earnings
Total revenues for the quarter rose 18.1% to $668.9 million from $566.3
million in the prior year. Rhodes, The RoomStore and Mattress Discounters
contributed approximately 38.0% or $254.0 million of the total revenues. Total
revenues at the Heilig-Meyers format for the quarter increased 0.6% from the
prior year. Net earnings decreased 25.9% to $10.2 million (or $0.17 per share)
from $13.8 million (or $0.25 per share) in the prior year.
Sales for the first quarter of fiscal 1999 increased 21.4% to
$593.8 million from $489.0 million in the first quarter of the prior year. Sales
for stores operating under the Heilig-Meyers format increased 0.2% over the
prior year quarter. Rhodes, The RoomStore and Mattress Discounters units
contributed approximately 41.2% or $245.0 million of sales. The overall increase
in sales was primarily attributable to an increase in operating units from May
31, 1997 to May 31, 1998, and a comparable store sales increase of 2.3% for the
three months ended May 31, 1998. Price changes had an immaterial impact on the
overall sales increase for the quarter.
Sales for the Company's four primary retail formats were as follows:
10
Three Months Ended
------------------
May 31, 1998 May 31, 1997
------------ ------------
(Sales amounts in millions)
# of % of # of % of
Stores Sales Total Stores Sales Total
------ ----- ----- ------ ----- -----
Heilig-Meyers 845 $348.8 58.8 847 $348.2 71.2
Rhodes 102 112.4 18.9 99 111.5 22.8
The RoomStore 69 73.5 12.4 43 29.3 6.0
Mattress
Discounters 225 59.1 9.9 - - -
----- ------ ----- ----- ------ -----
Total 1,241 $593.8 100.0 989 $489.0 100.0
===== ====== ===== ===== ====== =====
As a percentage of sales, other income decreased during the first
quarter to 12.7% from 15.8% in the prior year quarter. This decrease is
primarily the result of the concentration of total sales growth, compared to the
prior year quarter, in The RoomStore and Mattress Discounters formats. These
formats utilize credit programs maintained by a third party and, unlike the
Heilig-Meyers in-house program, generally do not produce finance income for the
Company. Within the Heilig-Meyers format, the increase in other income was
limited to .5% of sales due to flat sales and a higher level of securitized
receivables for the quarter ended May 31, 1998, compared to prior year period.
The Company plans to continue its program of periodically securitizing
a portion of the installment accounts receivable portfolio of its Heilig-Meyers
stores. Proceeds from securitized accounts receivable are generally used by the
Company to lower debt levels. Net servicing income related to securitized
receivables that have been sold to third parties is included in other income.
The Company offers third-party private label credit card programs to customers
of the Rhodes, The RoomStore and Mattress Discounters formats.
Costs and Expenses
Costs of sales increased during the quarter to 66.3% of sales from
65.4% in the prior year quarter. This increase was primarily the result of lower
raw selling margins by the Rhodes format. Raw selling margins in the Rhodes
stores were negatively impacted from increased sales of goods dropped from its
merchandise line-up. The Company is in the process of re-positioning the Rhodes
format and merchandise lines to appeal to a higher-end customer. Accordingly,
during the first quarter the Company liquidated certain goods, which will no
longer be sold in the Rhodes stores.
Selling, general and administrative expense decreased as a percentage of
sales to 36.6% from 38.0% in the prior year quarter. The decrease between
quarters was the result of sales leverage gained from total sales growth in The
RoomStore and Mattress Discounters formats, and a decrease in the salaries and
related expenses as a percentage of sales at the stores and in the
administrative functions of the Heilig-Meyers format. The Rhodes, The RoomStore
and Mattress Discounters units generally have lower levels of administrative
costs as a percentage of sales than the Heilig-Meyers units as these stores'
revolving credit extension and collections are maintained by third-party credit
providers. Lower salary and related expenses are the result of initiatives put
in place in conjunction with the Profit Improvement Plan.
Interest expense was 3.2% of sales in the first quarters of both fiscal
years 1999 and 1998. For the quarter, weighted average long-term debt increased
to $722.2 million from $641.5 million in the prior year first quarter. Weighted
average long-term interest rates decreased to 7.6% from 7.8% in the prior year.
Weighted average short-term debt increased to $228.1 million from $175.0 million
in the prior year. Weighted average short-term interest rates increased to 6.2%
11
from 6.0% in the prior year. Interest expense remained flat as a percentage of
sales to the prior year period due to sales leverage gained from the Mattress
Discounters units, which were purchased with common stock in July 1997. The
RoomStore, Rhodes and Mattress Discounters units do not offer installment credit
and, therefore, do not require the use of debt to finance such receivables. The
increase in long-term debt levels between years is a result of a $175 million
long-term debt issuance in July 1997.
The provision for doubtful accounts decreased for the first quarter, as a
percentage of sales, to 3.9% from 4.7% in the prior year quarter. The decrease
was the result of the total sales volume growth by The RoomStore and Mattress
Discounters formats, as these units generally do not offer in-house credit. The
provision was 6.4% of sales for the first quarters of fiscal years 1999 and 1998
for those stores offering installment credit.
The effective income tax rate for the first quarter of fiscal 1999 was
35.8% compared to 37.5% for the first quarter of fiscal 1998. The decrease is
due to the effect on the first quarter of fiscal 1998 by higher effective tax
rates of acquired operating subsidiaries resulting from the carryover tax
attributes of acquired assets and liabilities.
LIQUIDITY AND CAPITAL RESOURCES
The Company decreased its cash position $20.7 million to $28.1 million at
May 31, 1998, from $48.8 million at February 28, 1998, compared to an increase
of $6.9 million in the comparable period a year ago.
Net cash inflow from operating activities was $28.8 million, compared to
$13.8 million in the comparable period of the prior year. As the Company slowed
the expansion of its store base, cash flows provided by operating activities
exceeded cash used for investing activities for the first quarter of fiscal
1999. The Company traditionally produces minimal or negative cash flow from
operating activities because it extends in-house credit in its Heilig-Meyers
stores. During the quarter, installment accounts receivable increased at a
slower rate than the prior year quarter primarily due to the closing of certain
stores pursuant to the Profit Improvement Plan. Continued extension of credit
and related increases in customer accounts receivable will likely produce
minimal or negative cash flow from operations in the upcoming fiscal 1999
quarters. However, the Company expects to continue to periodically sell accounts
receivable as a source of cash flows from operating activities.
Investing activities produced negative cash flows of $18.7 million during
the first quarter of fiscal 1999 compared to negative cash flows of $45.5
million in the prior year first quarter. The decrease in negative cash flows
from investing activities is primarily due to a decrease in additions to
property and equipment during the period. The Company has slowed the growth of
its Heilig-Meyers format in accordance with the Profit Improvement Plan. During
the prior year quarter ended May 31, 1997 cash used for additions to property
and equipment resulted from the opening of 26 new store locations and related
support facilities as well as the remodeling and improvement of existing and
acquired locations. Capital expenditures will continue to be financed by cash
flows from operations and external sources of funds.
Financing activities produced negative cash flows of $30.9 million during
the first quarter of fiscal 1999 compared to a $38.6 million positive cash flow
in the prior year first quarter. The negative cash flow from financing
activities in the current year quarter was due to the decrease in notes payable.
In June 1997, the Company and a wholly-owned subsidiary filed a joint
Registration Statement on Form S-3 with the Securities and Exchange Commission
relating to up to $400.0 million aggregate principal amount of securities. There
12
were no issuances of debt pursuant to the joint Registration Statement during
the first quarter of fiscal 1999. As of May 31, 1998, long-term notes payable
with an aggregate principal amount of $175 million securities have been issued
to the public under this Registration Statement. As of May 31, 1998, the Company
had a $400.0 million revolving credit facility in place, which expires in July
2000. This facility includes thirteen banks and had $210.0 million outstanding
and $190.0 million unused as of May 31, 1998. The Company also had additional
lines of credit with banks totaling $60.0 million of which $36.1 was unused as
of May 31, 1998.
As a result of charges recorded in fiscal 1998 under the Profit
Improvement Plan, the Company obtained amendments to its bank debt agreements in
order to maintain covenant compliance. In addition, certain provisions of the
Company's bond indenture restrict the Company's ability to incur long-term debt
until certain covenant restrictions are met. Management expects to meet these
covenant restrictions in the fourth quarter of fiscal 1999. However, management
believes that the Company has adequate access to capital to finance accounts
receivable, inventories and other capital needs during this period. Pursuant to
the Profit Improvement Plan, management has taken steps to slow the growth of
the capital intensive Heilig-Meyers format and lower overall spending on capital
projects.
Total debt as a percentage of debt and equity was 61.2% at May 31,
1998, compared to 62.1% at February 28, 1998. The decrease in total debt as a
percentage of debt and equity is primarily the result of the use of cash
generated from operating activities to reduce notes payable outstanding. The
current ratio was 1.6X at May 31, 1998, compared to 1.8X at February 28, 1998.
The decrease in the current ratio from February 28, 1998 to May 31, 1998 is
primarily attributed to the reclassification of $130 million from long-term
notes payable to the current portion as a result of the maturity of these
amounts within the next twelve months.
OTHER INFORMATION
Year 2000 Issue
During fiscal year 1997, management established a team to oversee the
Company's Year 2000 date conversion project. After conducting its assessment of
all systems, management implemented a plan of corrective action using both
internal and external resources to enhance the systems for Year 2000 compliance.
Management expects to complete the project during fiscal year 1999, and does not
anticipate the amounts required to be expensed as part of the corrective plan to
have a material effect on the Company's financial position or results of
operations. The team is communicating with other companies, on which the
Company's systems rely and is planning to obtain compliance letters from these
entities. There can be no assurance, however, that the systems of these other
companies will be converted in a timely manner, or that any such failure to
convert by another company would not have an adverse effect on the Company's
systems. Management believes the Year 2000 compliance issue is being addressed
properly by the Company to prevent any material adverse operational or financial
impacts. However, if such enhancements are not completed in a timely manner, the
Year 2000 issue may have a material adverse impact on the operations of the
Company.
FORWARD-LOOKING STATEMENTS
Certain statements included above are not based on historical facts,
but are forward-looking statements. These statements can be identified by the
use of forward-looking terminology such as "believes," "expects," "may," "will,"
"should," or "anticipates" or the negative thereof or other variations thereon
or comparable terminology, or by discussions of strategy. These statements
reflect the Company's reasonable judgments with respect to future events and are
13
subject to risks and uncertainties that could cause actual results to differ
materially from those in the forward-looking statements. Such risks and
uncertainties include, but are not limited to, the customer's willingness, need
and financial ability to purchase home furnishings and related items, the
Company's ability to extend credit to its customers, the costs and effectiveness
of promotional activities and format realignments, the Company's ability to
realize cost savings and other synergies from recent acquisitions as well as the
Company's access to, and cost of, capital. Other factors such as changes in tax
laws, consumer credit and bankruptcy trends, recessionary or expansive trends in
the Company's markets, inflation rates and regulations and laws which affect the
Company's ability to do business in its markets may also impact the outcome of
forward-looking statements.
14
PART II
ITEM 1. LEGAL PROCEEDINGS
The Company previously reported involvement in certain cases regarding
non-filing fees charged by the Company on certain credit transactions as set
forth in the Company's Annual Report on Form 10-K for the fiscal year ended
February 28, 1998. In addition, Eubanks v. Heilig-Meyers Company and
Heilig-Meyers Furniture Company (alleging violation of Georgia statutes and
seeking certification of a class of Georgia residents and which had been
previously dismissed), was refiled on June 23, 1998 in the Superior Court of
Liberty County, Georgia.
15
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibits. See INDEX TO EXHIBITS
(b) The Company filed no reports on Form 8-K for the quarter ended
May 31, 1998.
INDEX TO EXHIBITS
Page
10. Contracts
(a) Registrant's Executive Income Continuation
Plan effective as of June 1, 1998.* 18
(b) Registrant's 1998 Stock Incentive Plan filed
as Exhibit A to Registrant's Proxy Statement
dated May 8, 1998 (No.1-8484) for its Annual
Meeting of Stockholders held June 17, 1998 is
incorporated herein by this reference.* -
27. Financial Data Schedule 29
- ------------------
*Management contract or compensatory plan or arrangement required to be filed
as an exhibit.
16
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Heilig-Meyers Company
(Registrant)
Date: July 14, 1998 /s/William J. Dieter
--------------------
William J. Dieter
Senior Vice President,
Accounting and Principal
Accounting Officer
17